In the office today with my copy of Literate Programming (which contains the essay in question) I can confirm that the sentence does appear in "Structured Programming with goto Statements" (it appears on page 28 of my copy). Here it is in a general context, not pertaining to a single particular example.

In support of your overall point, though, having just said "[w]e should forget about small efficiencies, about 97% of the time", the next paragraph opens: "Yet we should not pass up our opportunities in that critical 3%."