The statute seems pretty clear. It reads: "Any alien who applies or has applied for exemption or discharge from training or service in the Armed Forces . . . on the ground that he is an alien, and is or was relieved or discharged from such training or service on such ground, shall be permanently ineligible to become a citizen of the United States." So when Paulo Gallarde requested and received a discharge from the Navy (six months before his tour of duty was up) on the ground that he was an alien, it seems like he can't become a citizen. And so held Judge Burns (down here in San Diego).
The statute seems pretty unambiguous. Nonetheless, in the end, I agree with Judge Bea, who reverses Judge Burns and holds that the statute only applies to someone who avoids the draft. Judge Bea's opinion changed my mind; yes, the statute seems clear, but in context, and when the statutory provisions are read as a whole, the interpretation advanced by Judge Burns (and the government) would lead to absurdities, and isn't what I believe was intended by the statute.
It's a good example of context and structure and purpose trumping what would ordinarily be viewed as clear and unambiguous language. And I think that Judge Bea gets it right.