Is there a better way to do this, or one that is more easily understood?

A better and more easily understood (and maintained) way would probably be with a templating module as AnonyMonk has suggested. If you're willing to put all the translation strings into a single hash and pass it around by reference (and you're into masochism), maybe something like:

c:\@Work\Perl\monks>perl -wMstrict -le
"my %Xlate = (
   foo => { qw(one UNO  two DOS) },
   bar => { qw(fee fie  zit zot) },
   quux => 'hi there',
   );
 ;;
 sub expand {
   my ($str, $hr_xlt) = @_;
   ;;
   my $k = qr{ \w+ }xms;
   my $v = qr{ -> [{] \w+ [}] }xms;
   ;;
   $str =~ s{ (\$) ($k) ($v?) }{ qq{\$hr_xlt->{$2}$3} }xmseeg;
   return $str;
   }
 ;;
 my $s = 't$foo->{one}u $bar->{zit} v $quux w';
 print qq{'$s'};
 ;;
 $s = expand($s, \%Xlate);
 print qq{'$s'};
"
't$foo->{one}u $bar->{zit} v $quux w'
'tUNOu zot v hi there w'
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(Note this doesn't work if the string is '$quuxw'; more delimitation needed.)