Recursive clustering of points

function SplitTPAEx(const pts: TPointArray; w,h: single): T2DPointArray; cdecl;
var
  lo,hi: Int32;
  sqx,sqy,sqxy: single;
  procedure ConnectCluster(p: TPoint);
  var i,top: Int32;
  begin
    top := hi;
    for i:=hi downto lo+1 do
      //if (Abs(p.x-pts[i].x) <= w) and (Abs(p.y-pts[i].y) <= h) then
      if (Sqr(p.x-list[i].x)*sqy)+(Sqr(p.y-list[i].y)*sqx) <= sqxy then
      begin
        Swap(pts[i], pts[hi]); // move towards end
        Dec(hi);               // reduce upper bound
      end;

    for i:=hi+1 to top do
      ConnectCluster(pts[i]);
  end;

var top,n: Int32;
begin
  sqx := Sqr(w);
  sqy := Sqr(h);
  sqxy := sqx*sqy;

  lo := 0;
  hi := High(pts);
  while lo <= hi do
  begin
    top := hi;
    ConnectCluster(pts[lo]);

    // add the connected range
    n := Length(Result);
    SetLength(Result, n+1);
    Result[n] := Copy(pts, hi+1, (top-hi));
    Append(Result[n], pts[lo]);

    Inc(lo); // increase lower bound
  end;
end;