It definitely works under mod_perl. Jesse Erlbaum is a frequent poster on the mod_perl mailing list. You might try asking on the CGI::Application list if you don't get a good answer here.
You should ask Jesse to consider changing that $SIG{__DIE__} business. He's a nice guy; he just might do it. (Incidentally, he lives in New York too.)
Comment on Re: mod_perl, CGI::Application, and HTML::Template: bad combination?