The colorless functions approach has well-known disadvantages though, including providing less control and making interop a pain. It isn't like one approach is the correct one and another is a mistake.
> including providing less control and making interop a pain
This is true in some languages but not in Java. The limitations (and performance cost) are not from the nature of continuations/stackful coroutines/"colourless functions", but from their interaction with other constraints and existing designs in the language. E.g. in Java, virtual threads have zero impact on FFI.
In general, the costs and limitations associated with a feature in language X don't extrapolate to language Y, because they often stem from interaction with existing constraints in language X.
The design of FFI is a very common source of problems for various features. For example, if the FFI is designed such that you frequently pass pointers to to objects to C, that can have a big impact on other features. In Java, you nearly always only pass pointers to "off heap" memory, i.e. memory that's not managed directly by the JVM. While this has no performance cost, you could say that this, in itself, has some convenience cost, except Java programs need to rely on FFI much less than other languages, so the overall cost to convenience is low.
How can green threads have zero impact on FFI in the presence of callbacks across the boundary? I mean, as soon as the other side uses TLS in any way, for example, you have to figure out how to handle that, and it's not free.
In every user-mode thread or stackless coroutine (async/await) implementation I know, the construct is pinned (i.e. can't be preempted) while there's a foreign frame on the stack. There is no advantage to either design on that front.
But 1. there's no speed penalty in Java for doing that, and 2. In Java, calling native functions that block (which is the only time this limitation matters) is rare, especially in high concurrency situations where you'd use virtual threads in the first place.