Obviously -- it is a finite state machine, but this doesn't mean any less that it is a theoretical model.
>But this is similar to a patent on a new wing design. You can say it is simply a mathematical model of airflow and such. But the pudding is the creation, not the mathematical model of the wing.
No -- the wing is a physical object. I can hold a wing in my hand. Conversely, a patent on a wing design does not mean that I cannot use that wing design in a computer simulation of an airfoil. But a patent on bzip does mean, supposedly, that I cannot run bzip on a virtual machine. In other words, the wing design is the point, here: you could patent a specific device for running bzip, but you cannot patent bzip on all computing devices. Which, I suppose, might help to explain my point.