What you're describing sounds to me like a very LISP-y view of data. Alan Kay, by his own admission, wasn't very versed in the LISP tradition - based on what he's describing, at the time he was pretty deeply immersed in the more ALGOL-y side of the world, back in a time long before there was much cross-pollination between the two camps, and that would presumably have influenced his thinking.
So, semi-wild conjecture: It seems to me like what he was really getting at is that he wanted to get rid of the heap. Or at least shove it deeply into "implementation detail" territory, the same way languages like Haskell try to banish any evidence of the existence of memory registers from the programmer's consciousness.
In so many languages in the imperative tradition, the standard practice was to have most your data living out there, in this giant pile of shared memory, more or less available for anyone to see. I think that, even before the birth of C, most academics recognized that as a source of liability; a lot of ink was spilled dancing around possible solutions to that problem in the mid-late 20th century and beyond. What Kay is saying in TFA seems, to me, to place his thinking clearly in the middle of that whole scene.