hdb, it got a little more complicated than it was. Here is the the most recent version. There are a few more elsif statements. I am almost content with it now. :)

sub story {
  my ($source,$magic) = @_;
  my $tab = 3;
  
  my $inc = 0;
  my @sections;
  my @toc;
  while (my $line = <$source>) {
    chomp($line);
    next if !$line;
    
    if ($line =~ /^2/) {
      $inc++;
      my ($number,$text) = split(/ /,$line,2);
      push @toc, anchor(textify($text), { href => '#'.idify($text) });
    }
    
    push @{$sections[$inc]}, $line;
  }

  $inc = 0;
  for my $section (@sections) {
    if ($section) {
      section($tab, sub {
        for my $line (@{$section}) {
          if ($line =~ m/^</) {
            line($tab,$line);
          }
          elsif ($line =~ /^& /) {
            my ($symbol,$magic_word) = split(/ /,$line,2);
            $magic->{$magic_word}->();
          }
          elsif ($line =~ /^[1-6]\s/) {
            my ($heading,$text) = split(/ /,$line,2);
            my $id = idify($text);
            heading($tab,$heading,$text, { id => $id });
          }
          elsif ($line =~ /^bq\s/) {
            my ($symbol,$text) = split(/ /,$line,2);
            blockquote($tab,$text);
          }
          elsif ($line =~ /^[bh]r$/) {
            line($tab,"<$line>");
          }
          else {
            paragraph($tab,$line);
          }
        }
      });
    }
    if ($inc == 0 && @toc > 3) {
      section($tab, sub {
        list($tab, 'u', \@toc, { class => 'two' });
      }, { class => 'contents'} );
    }
    $inc++;
  }
  
#  paragraph($tab,"written by $root_user", { class => 'author' });
}
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