God Loves the World? (John 3:16 (LD 5; COD Head 2 Article 1-4)

John 3:16 is a passage that seems to show the problem with a Reformed doctrine of salvation.  It seems to be rather plain and simple that it is God who loves the world.  So, if God loves the world then how can God only apply the blessings of Christ to His people?  How would a Reformed person explain this text without explaining the whole text away?