> their values will be copied in when the function is reached in the source code. So it would be equivalent to adding extra arguments to g and passing the variable values in that way. And it wouldn't allow the programmer to create object-like things and couldn't create reference loops requiring garbage collection.

That is definitely desirable! K (and kin) are fully referentially transparent and have value semantics. It would be bizarre and inconsistent to break referential transparency for closures.