Auto-paginate after 500 words, but respect paragraphs and don't leave page stubs.

gistfile1.php

<?php
/**
 * Auto-paginate after 500 words
 */
add_action( 'loop_start', function( $query ) {

	if ( ! is_single() || 'post' != get_post_type() || ! $query->is_main_query() )
		return;

	$content = $query->posts[0]->post_content;

	if ( 900 > str_word_count( $content ) )
		return;

	if ( false !== stripos( $content, '<!--nextpage-->' )
		|| false !== stripos( $content, '<!--nopage-->' ) )
		return;

	$content = wpautop( $content );

	$content_array = str_split( $content );
	$word_array = str_word_count( $content, 2 );
	$word_count = 0;
	$next_page_count = 0;
	while ( count( $word_array ) > 900 ) {

		$word_array = array_slice( $word_array, 500 + $word_count, null, true );
		$word_count = 0;
		foreach( $word_array as $i => $word ) {

			if ( 'p' != $word ) {
				$word_count++;
				continue;
			}

			// Found a '<p>'
			if ( '<' == $content_array[$i-1] ) {
				$k = $i-2;
			}
			// Found a '</p>'
			else if ( '<' == $content_array[$i-2] ) {
				$k = $i+3;
			} else {
				$word_count++;
				continue;
			}

			$k = $k + ( $next_page_count * 15 );
			$next_page_count++;

			$content = substr( $content, 0, $k ) . '<!--nextpage-->' . substr( $content, $k );
			break;
		}
	}
	$query->posts[0]->post_content = $content;
});

Does this get added to the functions.php file or somewhere else?