This effect is a change in character, not simply extrinsic to man. How this can be kept from one's central view of salvation is a massive omission. Clearly a salvation context, which mentions how the inner renewal is essential in the process of justification of the sinner. And I will put my spirit within you, and cause you to walk in my statutes, and ye shall keep my judgments, and do them. This certainly is far from Luther's imagery of a snow-covered dung hill.
Regeneration is clearly a new creation, and is clearly central to salvation.
The man with whom he is contrasted is a man of humility, whom God sees as just and righteous. It is obvious that Jesus is intent upon highlighting how one man's state of heart was filled with humility. To this man God showed mercy. The proud, boastful man again is cast down as the one to not receive a reward from God since he attempts to obligate God by his strict adherence to the written code. It is true that the man who humbles himself will be justified before God.