This isn't a Perl question unless you have a Perl specific question.

As a sys admin question, it appears that one program is taking over too much physical memory that it is affecting other non related programs.

Of course, switch to 64 bit Perl and add a heck of a lot of GB's of memory is one possibility.

Another possibility is to limit the amount of physical memory that this Perl program can use, perhaps limit-memory-usage-for-a-single-linux-process. This will of course slow this Perl program down dramatically, but allow other programs to proceed normally.

And of course fix the Perl program! But to do that, we need code that is focused on the problem area. Don't expect a re-write of a 10,000 line program here. But you can expect help if you are attempting to modify this thing so that for example the split can happen on a record by record (usually line) basis instead of iterating over an in memory copy of the file.