That's how I expect it to behave. But anyway, the alternative (x in a new lexical environment each time the loop body is entered) only makes sense in a language

That's how I expect it to behave. But anyway, the alternative (x in a new lexical environment each time the loop body is entered) only makes sense in a language where variables are scoped to a lexical block, not in Python where variables are scoped to the whole function.