(Edit: See perrin's answer; his way is MUCH cleaner)

The problem is your slurp of all the lines in your join, I think. -i only works right if it can match up your print to the file currently being read, and your <> slurped up all the files.

I _think_ this may work better for you (untested!):

 
perl -i.bak -ne'if($f ne $ARGV[0]){if(defined($f)){print "prepend\n",@
+lines,"append\n"; @lines=();} $f=$ARGV[0]} push @lines,$_;' *.html */
+*.html */*/*.html */*/*/*.html
[download]

It's alway safer to use .bak on your -i, in case of disasters like the one you mentioned in your post.

If it all worked, it's easy to get rid of the .bak files.

You might also want to think about using find | xargs instead of the nested directory wildcards; it's probably going to work more efficiently, and it won't croak on a huge directory tree.
--
Mike