You're right: the \bs in the pattern do seem to sabotage $1. In particular, any char in front of the () group kills the $1, if the g and i switches are both set.

my $line = 'She was very absorbed in her homework.';
my $word = 'absorb';

$_=$line;
s/ ($word)//g;
print "\$1 is $1\n";
$_=$line;
s/ ($word)//i;
print "\$1 is $1\n";
$_=$line;
s/ ($word)//ig;
print "\$1 is $1\n";
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One other note:

#This also fails
s/(\b$word)//ig;
#Although this is ok
s/( $word)//ig;
#And this is fine, too!
my $pat = qr/\b($word)/;
s/$pat//gi;
#or even
my $pat = qr/($word)/;
s/\b$pat//gi;
#or EVEN THIS!
my $pat = qr/$word/;
s/\b($word)//gi;
[download]

I think we have a perlbug. Frenzy of updates completed. Really.