No that's just not true. Your step function takes time linear in the length of string. For example, `newstate = [0 for x in state]` takes θ(|state|) time, and because you initialise the state with `range(len(string)+1)`, that's linear in the string length.

Now you're talking about the cost of constructing the DFA, not searching the index with the resulting DFA. The cost of construcing the DFA is irrelevant, and even then you can construct the DFA in O(n) with my method for fixed max edit distance and fixed alphabet. Same as that paper.