In perl 5.8 you can open a scalar as if it were a file, by giving a reference to the scalar in the filename slot,

open my $fh, '<', \$output or die $!;
while (<$fh>) {
    #...
}
close $fh or die $!;
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In earlier perl IO::Stringy or IO::Scalar are needed, but their treatment of $/ leaves something to be desired.