I think this is mostly a disagreement around terminology.

The GP is referring to purely functional languages like Haskell, where functions don’t have state and are referentially transparent. In Haskell, useState would have to use a monad.

Racket (and Lisp in general) has mutable state so doesn’t guarantee referential transparency. You can definitely write pure functions, and that’s good style in many contexts, but it’s not required or enforced.

I personally agree with the GP, and assume “functional programming” to mean pure functional programming. It’s common to use an FP style in non-pure languages, but I think this is FP if and only if you completely avoid state.

One way or another it's fine to consider methods that explicitly use state as 'not functions'. This is the mathematical definition after all.

That definition leads to the conclusion that hooks aren't functions, which seems fine honestly. I mean, why insist on using them as functions when they're clearly not? Their syntax is a bit unfortunate, as is the fact that you're not forced to declare them immediately at the start of your function, which looks like it would have cleared up many of the potential problems. Either way their use case is clear, using hooks seems to basically dynamically declare a state monad for that particular function (hence why I'd recommend doing this upfront).

I'm not a React programmer though, so take this with a grain of salt.