[Sythalin]

You can't check for a local variable outside it's block. You'd have to rename the global foo as something else and pass the data out to it.

function testfunction(frame)
    if not arg1 then 
        local foo = "foo"
        local bar = "bar"
        arg1 = foo
        arg2 = bar
    end
    text=arg1.. arg2
    DEFAULT_CHAT_FRAME:AddMessage(text)  -- test to make sure everything goes smoothly

local f = CreateFrame("FRAME", "Blah")
f:SetScript("OnUpdate", testfunction(self))

end

But that won't help your 60 upvalue any. For that, you're don't really have a choice but to condense it down via one of the previously mentioned methods.