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The context can change each time. To implement a UTM only requires 2 states and 3 symbols or the reverse.

So if you use the context not as a tape in itself, but as an io channel to read/write an infinite tape, the context for any given step can remain fixed in size, and so the step itself can be O(1).

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Any basic lookup table is turing complete if you bolt an external infinite tape and read/write head onto it. But then that’s moving the goal post since the context wouldn’t be the “limitless tape” and it’s not a transformer “in the normal way” because turing completeness would be coming from external io and not from auto regressive self attention. Different topic.
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It's not contradictory at all. The dfa at each step of the turing machine model is also o(1).
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Of course it is. You’re conflating a turing machine with a transformer. Transformers don’t have a local read/write head. The [self] attention is over the whole context, which makes each step O(N) at best (with caching) and O(N^2) w/o.
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