++I0! Minor changes to remove the start/stop markers which I think was desired:

# The golfish way:
    $text =~ s#(\s)\s+|STARTPRESERVE(.*?)STOPPRESERVE#$1$2#gs;
    # Update:  Oops!  This fails if a run
    # of whitespace doesn't start with ' '.

# or, if you don't like warnings:
    $text =~ s#\s{2,}|STARTPRESERVE(.*?)STOPPRESERVE#
      defined $1 ? $1 : " " #seg;
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Greetings I0,

++! That's amazingly cool code. I love one-liners like that. In my specific situation, I don't need the START/STOP markers removed, and I can't imagine a senario where the data string would contain nested labels, however... I'm still curious. How would the nested labels version look?

(Note that I did spend some time trying to figure this out for myself so I could at least post a few bits of code here for others to revise, but I've failed to figure out even the basic theory without going into many, many lines of basic code.)

-gryphon
code('Perl') || die;

#Okay, you asked for it:

$_ = '0   1   
STARTPRESERVE
    STARTPRESERVE
        2 
    STOPPRESERVE
STOPPRESERVE
3   4
STARTPRESERVE
    STARTPRESERVE
        5
    STOPPRESERVE
STOPPRESERVE
6   7';

(my $re=$_)=~s/((STARTPRESERVE)|(STOPPRESERVE)|.)/${['(','']}[!$2]\Q$1
+\E${[')','']}[!$3]/gs;
$re= join'|',map{quotemeta}eval{/$re/};
die $@ if $@ =~ /unmatched/;
s/\s+|($re)/${[$1,' ']}[!$1]/g;
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