You're right, that was imprecise of me. But if F = (\x. \y. (|n| args...)) is equivalent to True or False, then it is also equivalent to (F True False), which brings us back to a toplevel (|n| args...).

Another slight correction/expansion is that (|n| args...) = n - numargs when n >= numargs. This happens to coincide with False when n = numargs + 1, so it would have been better if I had said "when n > numargs + 1".