I'd guess it's wrong too. It looks as if it's trying to cluster states, but the part that says "repeat transformations until no changes are possible" suggests i

I'd guess it's wrong too. It looks as if it's trying to cluster states, but the part that says "repeat transformations until no changes are possible" suggests it might eliminate too much for the sake of a simple formulation. In a 2-symbol TM, there are at most two outgoing edges in a state. If you remove the self-reference, you're left with just one. That seems to remove too much of the hidden complexity. I suppose the thinking behind it is "a loop is not spaghetti code", but a loop in higher level language rarely translates to a single state moving to itself. OTOH, it's possible to write spaghetti-code in a system that only has while loops and if-then-else by simply having very complex conditions, and modifying the variables on which they depend at seemingly unrelated points in the code. After all, both are TM complete.