Static front page with recent posts pagination

Is it possible to include index pagination on a static front page?

I have a child theme of twenty eleven and I am attempting to have a home page where there is a slider for sticky posts followed by the recent posts with a custom query, that I would like to be paginated.

I created a page template, and set that page template to be the static front page.

For some reason, pagination only works when I am logged in to WordPress. If I visit the site as an anonymous visitor, I get a 404 and the URL looks like “example.com/2011/09/268” instead of “example.com/page/2”.

Am I going about this the completely wrong way?

Below is the code for the page template:

<?php
get_header(); ?>

        <div id="primary">
            <div id="content" role="main">

                <?php the_post(); ?>

                <?php
                    $sticky = get_option( 'sticky_posts' );

                    // Proceed only if sticky posts exist.
                    if ( ! empty( $sticky ) ) :

                    $featured_args = array(
                        'post__in' => $sticky,
                        'post_status' => 'publish',
                        'posts_per_page' => 10,
                        'no_found_rows' => true,
                    );

                    // The Featured Posts query.
                    $featured = new WP_Query( $featured_args );

                    // Proceed only if published posts exist
                    if ( $featured->have_posts() ) :

                    $counter_slider = 0;

                    ?>


                <div class="featured-posts">
                    <h1 class="showcase-heading"><?php _e( 'Featured Posts', 'twentyeleven' ); ?></h1>

                <div class="flexslider">
                  <ul class="slides">
                <?php
                    // Let's roll.
                    while ( $featured->have_posts() ) : $featured->the_post();

                    if ( has_post_thumbnail()) : ?>
                    <li>
                        <a href="<?php the_permalink(); ?>" title="<?php the_title_attribute(); ?>" >
                           <?php the_post_thumbnail(); ?>
                           <p class="flex-caption"><a href="<?php the_permalink(); ?>"
                            title="<?php printf( esc_attr__( 'Permalink to %s', 'twentyeleven' ),
                            the_title_attribute( 'echo=0' ) ); ?>" rel="bookmark">
                            <?php the_title(); ?></a></p>
                       </a>
                    </li>
                    <?php
                    endif; // End check for post thumbnail ?>
                <?php endwhile; ?>
                  </ul>
                </div>

                <?php //endif; // End check for more than one sticky post. ?>
                </div><!-- .featured-posts -->
                <?php endif; // End check for published posts. ?>
                <?php endif; // End check for sticky posts. ?>

                <?php
                    // Display our recent posts
                    // Setup for pagination of custom loop
                    $paged = (get_query_var('page')) ? get_query_var('page') : 1;

                    $recent_args = array(
                        'order' => 'DESC',
                        'post__not_in' => get_option( 'sticky_posts' ),
                        'category__not_in' => array( 46, 47 ),
                        'tax_query' => array(
                            array(
                                'taxonomy' => 'post_format',
                                'terms' => array( 'post-format-aside', 'post-format-link', 'post-format-quote', 'post-format-status' ),
                                'field' => 'slug',
                                'operator' => 'NOT IN',
                            ),
                        ),
                        'posts_per_page' => 10,
                        'paged' => $paged,
                    );

                    // Our new query for the Recent Posts section.
                    query_posts( $recent_args );

                    // The first Recent post is displayed normally
                    //if ( $wp_query->have_posts() ) : $wp_query->the_post();
                    ?>
                    <h1 class="showcase-heading"><?php _e( 'Recent Posts', 'twentyeleven' ); ?></h1>
                    <?php twentyeleven_content_nav( 'nav-above' ); ?>
                    <div class="recent-posts">
                    <?php
                        if ( $wp_query->have_posts() ) :
                        while ( $wp_query->have_posts() ) : $wp_query->the_post(); ?>
                            <div class="recent-post">
                            <?php if ( "image" == get_post_format() ) :

                                get_template_part( 'content', 'image' );
                            else : ?>
                                <h2 class="entry-title">
                                    <a href="<?php the_permalink(); ?>" title="<?php printf( esc_attr__( 'Permalink to %s', 'twentyeleven' ), the_title_attribute( 'echo=0' ) ); ?>" rel="bookmark"><?php the_title(); ?></a>
                                </h2>
                                <div class="entry-meta">
                                    <?php twentyeleven_posted_on(); ?>
                                </div><!-- .entry-meta -->
                                <?php if( has_post_thumbnail() ) : ?>
                                    <a href="<?php the_permalink(); ?>" title="<?php printf( esc_attr__( 'Permalink to %s', 'twentyeleven' ), the_title_attribute( 'echo=0' ) ); ?>" rel="bookmark">
                                    <?php the_post_thumbnail('excerpt-thumbnail', array('class' => 'alignleft') ); endif; ?></a>
                                <?php the_excerpt(); ?>
                                <p class="comments-link">
                                        <?php comments_popup_link( '<span class="leave-reply">' . __( 'Leave a Comment', 'twentyeleven' ) . '</span>', __( '<b>1</b> Comment', 'twentyeleven' ), __( '<b>%</b> Comments', 'twentyeleven' ) ); ?>
                                </p>
                            <?php endif; ?>
                            </div>
                            <hr />
                        <?php
                        endwhile; ?>
                        <?php
                        endif; ?>
                    <?php
                    twentyeleven_content_nav( 'nav-below' );
                    // Reset because we used query_posts
                    wp_reset_query(); ?>
                    </div> <!-- End recent-posts -->

                <?php //get_template_part( 'content', 'page' ); ?>

                <?php //comments_template( '', true ); ?>

            </div><!-- #content -->
        </div><!-- #primary -->

<?php get_sidebar(); ?>
<?php get_footer(); ?>