And, as you'll see soon enough, foo.pm reloads without any complaints, time and time again.

Not on my system it doesn't. The issue is that you effectively have:

{
   # one scope
   no warnings;
   # but the eval generates an inner scope
   {
       # where this over-rides the outer scope no warnings
       # or $^W = 0 - the inner scope reigns supreme.
       use warnings;

   }
}
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This will remove the warnings from the reload.pm reloading itself but as noted this does not fix bar.

#!/usr/bin/perl
use strict;
use warnings;
use reload;

do {
    print "Hit Enter.\n";
    reload::reload("foo");
    foo::bar();
    reload::reload("reload");
} while <STDIN>;

package reload;
use warnings;
use strict;
{
    no warnings;
    sub reload {
        my ($PM) = @_;
        delete $INC{"$PM.pm"};
        eval "require $PM";
    }
}
1;

package foo;
use strict;
use warnings;
sub bar { print "Works\n" }
1;

__DATA__
C:\>perl test.pl
Hit Enter.
Works

Hit Enter.
Subroutine bar redefined at foo.pm line 4, <STDIN> line 1.
Works

Hit Enter.
Subroutine bar redefined at foo.pm line 4, <STDIN> line 2.
Works

Hit Enter.
Subroutine bar redefined at foo.pm line 4, <STDIN> line 3.
Works

Hit Enter.
Subroutine bar redefined at foo.pm line 4, <STDIN> line 4.
Works

Hit Enter.
Subroutine bar redefined at foo.pm line 4, <STDIN> line 5.
Works
^C
C:\>
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