Hmm, I'm not sure what is happening here. I used the following and got the expected results:

#!/usr/bin/perl -w

use strict;

my %template = (
        tag1    => 'test1',
        tag2    => 'test2',
);

my $tmp = "%tag1% went to %tag2%";
$tmp =~ s/\%(\S+)\%/$template{$1}/gi;
print $tmp,"\n";
[download]

and that produced:

test1 went to test2

What are the results you are getting?

-loc