Either method seems to work and I guess the only question that remains is in either method is one any more secure than the other and if there is a way to base64 encode within these schemes.

Does anyone know if there is anyway to actually see what headers are getting sent from the perl script?

This will show you pretty much everything that goes on:

LWP::Debug::level('+');
[download]

Or you might just want LWP::Debug::level('+conns');

My method definitely Base64-encodes the username and password, but that doesn't make it more secure, really. It's just done so there are no special characters.