The rule I follow (and one that I think is best for code readability) is that you declare a variable the first time you use it. If you're using it in multiple loops, you declare it above the first loop that uses it.

This is a trivial example:

private function foo(data:Array):void
{
    var myVar:Boolean = true;
    var i:int;
    var len:int = data.length;
    for (i = 0; i < len; ++i)
    {
        if (data[i] == "")
        {
            myVar = false;
            break;
        }
    }
    if (myVar)
    {
        for (i = 0; i < len; ++i)
        {
            trace(data[i].length);
        }
    }
}

If you're copying and pasting those loops around, you really should consider learning how to write DRY code and use subroutines.
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