It does indeed continue to recurse.

the code I think is resposible is in two parts

*print = *PRINT;
*printf = *PRINTF;
*new = *TIEHANDLE;
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those calls happen outside of any sub in the Filter::Handle package, so they cause usage of those symbols in F::H to resolve to those subs in the Filter::Handle package.

sub PRINT {
  my $self = shift;
  my $fh = *{$self->{fh}}}; # the file handle we tied in TIEHANDLE
  print $fh $self->{output}->(@_); # the sub we passed in in TIEHANDLE
}
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that print never used to call PRINT again.

I'll try to reduce it to a simple case, but it will have to wait till I get gome - it is 8:30pm here.