Each local variable … must have a definitely assigned value when any access of its value occurs.

An access to its value consists of the simple name of the variable … occurring anywhere in an expression except as the left-hand operand of the simple assignment operator =

So the JLS supports the interpretation of “use” that is implied in this post. Whether those are the best semantics for a functional language is a different question. But then, Java in its initial design had no pretentions to being a functional language.

[Edit, 28-July-2013] This question continues to gives rise to a lot of confusion, both because Paulo’s comment is very reasonable and because a long-superseded version of SoL did state (in §6, with examples) that the assignment-before-use rule would be refined to allow lambdas to use local variables for self-reference. That decision was reversed and the facility removed from the JSR spec in October 2012, because it was felt that there was too much work involved to be worth supporting a corner-case with a simple workaround.