I guess my VMS background is showing here (the VMS concept of a file is a record stream, not a byte stream). Besides, the diamond <> operator works on lines unless you change $/.

In terms of binary files, I was thinking of RTF or word documents - something for which insertion and deletion could be valid operations.

You are right about binary files generally, as without insertion/deletion, Algorithm::Diff is not appropriate. However, there's no reason not to use the same API (objects, diff, patch, merge) to do in-situ comparison. This can be achieved by subclassing VCS::Lite and providing some new methods.