jeffa's answer above is correct, but I'd like to suggest an alternative: use CGI.pm's popup_menu (or scrolling_list) method to populate a <tmpl_var>. This is addressed in more detail in the HTML::TemplateFAQ - question number 11.
Ya know ... this really is a smart way to do it. Thanks for
bringing it up. Personally, i don't think this violates the
golden rule of separation because a <select> is a
<select> is a <select>, and they can be a real pain to
create with <tmpl_loop>'s. samtregar++ :)