THE PILOT AND CREW WERE USING AN AIR AMBULANCE HELICOPTER WHILE PARTICIPATING WITH THE FIRE DEPARTMENT IN A SIMULATED DISASTER DRILL. DURING THE DRILL, THE HELICOPTER TOOK OFF WITH TWO OTHER OCCUPANTS THAT HAD VOLUNTEERED TO ACT AS IMMOBILIZED PATIENTS. WITH THIS LOAD, IT WAS NECESSARY TO FLY WITH THE RIGHT CARGO DOOR OPEN. WHILE CLIMBING THROUGH ABOUT 600 FT AGL, A LOSS OF DIRECTIONAL CONTROL WAS EXPERIENCED. THE PILOT SUSPECTED A LOSS OF THE TAIL ROTOR AND ENTERED AN AUTOROTATION. THE HELICOPTER IMPACTED THE TERRAIN AT A HIGH RATE OF SINK AND WAS SUBSTANTIALLY DAMAGED. AN INVESTIGATION REVEALED THAT A STRAP, NORMALLY USED TO SECURE CARGO AND PATIENTS, HAD DEPARTED THE CABIN AREA THROUGH THE OPEN CARGO DOOR. THE STRAP HAD BECOME ENTANGLED ON THE TAIL ROTOR. ONE TAIL ROTOR BLADE WAS TORN OFF ABOUT FOUR INCHES FROM THE HUB.