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That kind of variable shadowing is a smell. The compiler should warn about it, and/or re-bind the local method as expected (possibly shooting programmer in the foot, but hey... that's why it's a smell, Don't Do It). Forcing an inconsistent syntax to handle one corner case seems like another smell in itself.

Personally I would rather leave the syntax disambiguation to the programmer when relevant, rather than enforcing a single, awkward-looking syntax for all cases.

Its true, but Joe is also correct that this is going to be something people complain about for decades.