:crlf converts 0D 0A into 0A on read, and it converts 0A into 0D 0A on write. This was being done to the encoded strings when it should have been done to the decoded strings.

(My earlier post has been edited to integrate this.)

Would binmode() work? I don't have any files like that at my disposal to test.

binmode would not work.

When binmode applies :raw, it disables any existing :crlf layer rather than removing it. And a subsequent :crlf renables the existing :crlf layer rather than adding a new one. That means that

binmode($fh, ':raw:encoding(UTF-16LE):crlf')
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is no different than

binmode($fh, ':encoding(UTF-16LE)')
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It's therefore impossible to apply :encoding(UTF-16LE) to STDIN, STDOUT and STDERR on Windows (if you also want to :crlf). You'd need something like the following instead:

open(my $fh, '<&=:raw:encoding(UTF-16le):crlf', fileno(STDIN));
*STDIN = $fh;
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(Untested)