Thanks - yes the || warning was a hangover from first attempt that should have been removed. Here's a slightly better reworked version - NB you could probably make this more succinct using a map instead of the while.

use strict;
use warnings;
use Data::Dumper;

=pod

Interpolates source text tags with <%keyname%> syntax with values from
+ hashref $vars

=cut

  my $text =  'this is my text with a <%VAR%> to ' . 
                      'interpolate and an no specified "<%VAR3%>"';
  my $vars = { 
      'VAR' => 'value taken from a data structure',
      'VAR1' => 'Variable 1'
      };
  
  ## Identify any tags not defined within $vars and append to message
  while ($text =~ /<%(.+?)%>/g )
  {
    if (!defined $vars->{$1} )
    {
      #$vars->{$1}  = " no value specified for variable $1";
      #$vars->{$1}  = "$1";
      $vars->{$1}  = '';
      ## keep a log of missing variables
      $vars->{MESSAGE} .= "$1 undefined <br />\n"; 
    }
  }
  $text =~ s/<%(.+?)%>/$vars->{$1}/g; 
  print qq{\n\n\n\n$text\n};
  print Dumper $vars;
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