Lambda the Ultimate

Over at Russ Cox's blog:

In 1997, on his retirement from Bell Labs, Doug McIlroy gave a fascinating talk about the “History of Computing at Bell Labs” ...

My favorite parts of the talk are the description of the bi-quinary decimal relay calculator and the description of a team that spent over a year tracking down a race condition bug in a missile detector (reliability was king: today you'd just stamp “cannot reproduce” and send the report back). But the whole thing contains many fantastic stories. It's well worth the read or listen. I also like his recollection of programming using cards: “It's the kind of thing you can be nostalgic about, but it wasn't actually fun.”

Okay, this might seem like an odd question, but is there contention on whether or not a while loop that performs assignment on local function variables is pure functional? For example the following Java code:

int process(int[] xs) 
{
  int zeros = 0;
  int sum = 0;
  int i=0;
  while (i < xs.Size) {
    if (xs[i] == 0)
      zeros++;
    sum += xs[i];
    ++i;
  }
  return sum - zeros;
}

Now I have heard frequently that the above code is considered to have side-effects because of the local assignments to variables. However, the mapping to pure-functional stack-based code (here shown in Cat) is very straightforward:

define process {
  // top argument = xs
  0 // zeros
  0 // sum
  0 // i
  [
    dig3 // bring xs to top of local stack
    dupd swap get_at eqz // xs[i] == 0
      [[inc] dip3] // inc zeros
      []
    if
    dupd swap get_at // tmp = xs[i]
    [bury3] dip // put xs to bottom of local stack
    swap [add_int] dip // sum += tmp
    inc // ++i
  ]
  [
    dig3 count [bury3] dip // tmp = xs.Size
    dupd lt_int // i < tmp
  ]
  while
  pop // remove i
  swap sub_int // sum-zeros
}

So, my problem is that I am not sure whether this is old news or new news. Any feedback would be appreciated.