In my company a loss off control is defined as a deviation from the intended flight path.
The phrase "intended flight path" isn't what you think it means. A better phrase might be, "a deviation from the commanded flight path".
In this case the captain "intended" to descend... (just from the wrong place). He commanded a 900 fpm descent by programming the AP and pulling the VS knob. The aircraft descended perfectly as commanded. There was never a deviation from the flight path the pilot set, so there was never a loss of control.
Had the aircraft impacted the terrain, we would have classified this as CFIT, not LOC-I.
Lots of holes in the swiss cheese on this incident, including the PF not verbalizing what he was doing, the PM being distracted by the continuous PAR instructions, and a trainee controller being complacent.