Hmm, there has been some effort in recent times put into cleaning up re 'debug' output, but (checking) it appears that this has been added specifically for UTF8 strings; indeed, if you have perl-5.8.0, you should find that forcing the string to be UTF8-encoded will give you the output you're looking for:

  use re 'debug';
  $_ = join '', map chr, 0 .. 31, 128 .. 255;
  chop($_ .= chr(256));  # same string, but now upgraded to UTF8
  1 while m{.}sg;
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Certainly I agree that the debug output should be sanitised for such characters and I feel it should be possible to fix that for 5.10.0, though I don't know if it is likely to make it into 5.8.1.