# Right here, $_ contains "nm : $tag" from the tagheader() # I see that $_ has been modified by tagheader() # This is my problem and I'm stumped :(

O.k., that's simple enough to fix:
Add a   local $_; near the top of the body of tagheader.

One thing I would do differently is load the contents of the stylesheet file into an in-memory structure, rather than re-read the file every time you need to look up a tag.
Perhaps something like this:

{
  my %tags;

  # here's where we load the %tags:

  open STYLESHEET, '< stylesheet.txt'
    or die "Error opening stylesheet.txt: $!";

  ###########################################################
  # "HEADER" appears before "nm" in the style sheet
  # Find each "HEADER" in the file and assign $1 to $header
  # If we find the $tag we're looking for return $header
  #
  local $_;
  my $header;
  while (<STYLESHEET>) {
      if ( /^HEADER (\d+):/ ) {
          $header = $1;
      }
      elsif ( /^nm : (\w+)/ ) {
          $tags{$1} = $header;
      }
  }
  close STYLESHEET;


  # and here's the function we call to look up a tag:

  sub tagheader {
    my $tag = shift;
    $tags{$tag}
  }
}
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PS: ++ to you for using strict.

jdporter
The 6th Rule of Perl Club is -- There is no Rule #6.