Rather than striping newlines, I'll try and answer your other question, about doing a "multiline matching expression". Do you know about the "s///ms" trick? Typically you use the m and s modifiers when working on a string with embedded newlines, one changes the meaning of . so that it also matches a /n, the other changes the meaning of ^ and $ so that they match the beginning and end of lines (most people I know use them both together and don't bother remembering which one does which...):

my $string = <<ENDSTRING;
 <thing>
 condition condition
   condition   condition
    randomness
      other junk
 </thing> 
ENDSTRING

print "$string\n";

$string =~ s{ <thing>.*?</thing> }
            {<THANG>blah</THANG>}msx;

print "$string\n";
[download]

That should output:

 <thing>
 condition condition
   condition   condition
    randomness
      other junk
 </thing> 

 <THANG>blah</THANG> 

I'd recommend reading the "matching within multiple lines" recipe in the Perl Cookbook (that's recipe 6.6 in both the 1st and 2nd editions).

And by the way... you're not rolling your own code to parse HTML or XML are you? You should be looking for already existing modules out on CPAN.