ssh is reading and writing directly to /dev/tty. In order to control this, you need to do a bit of hokey pokey with setsid, open a new tty for your new process group, and then dup those file descriptors in your parent to pipes that speak to your child. It's a hassle.

I ran across this trying to do y2k testing with sudo, which does the same thing. I'll update this node with code if I can find it ...

Updated:
Admittedly, this isn't perl, but you should be able to adapt ...

   pipe(toslave);
   pipe(frslave);
   if (fork() == 0)
   {
      int fd;

      close(0);
      dup(toslave[0]);
      close(1);
      dup(frslave[1]);


      (void)setsid();         /* become session leader and */
                              /* lose controlling tty */
      fd = open("/dev/console", O_RDWR);
#ifndef hpux
      (void)ioctl(fd,TIOCSCTTY,0);
#endif

      free(argv[0]);
      argv[0] = (char *)malloc(5 * sizeof(char));
      sprintf(argv[0],"ssh");
      execv("/usr/bin/ssh", argv);
      fprintf(stderr,"Bad exec (%u)\n", errno);

      exit(0);
   }

   write(toslave[1],PASSWORD, strlen(PASSWORD));
   if (! strncmp("-v", argv[1])) exit(wait(NULL));
   if (! strncmp("-k", argv[1])) exit(wait(NULL));
   num=read(frslave[0],buf,359);
   buf[num]='\0';
   printf("%s", buf);
   exit(wait(NULL));
}
[download]

I'll perlify later this weekend ...