Here is simplified code:

while(<DATA>){
  chomp; # remove newlines
  next unless $_; # no empty lines?
  # check if a newline is required
  s/(\d+:\d+)/\n${1}/;
  # make lines end in space (separate words)
  s/\s?$/ /;
  print;
}
print "\n"; # end
__DATA__
3:3 And he shall offer of the sacrifice of the peace offering an

offering made by fire unto the LORD; the fat that covereth the

inwards, and all the fat that is upon the inwards, 3:4 And the two

kidneys, and the fat that is on them, which is by the flanks, and the

caul above the liver, with the kidneys, it shall he take away.

3:5 And Aaron's sons shall burn it on the altar upon the burnt

sacrifice, which is upon the wood that is on the fire: it is an

offering made by fire, of a sweet savour unto the LORD.
[download]

Yields:

3:3 And he shall offer of the sacrifice of the peace offering an offer
+ing made by fire unto the LORD; the fat that covereth the inwards, an
+d all the fat that is upon the inwards, 
3:4 And the two kidneys, and the fat that is on them, which is by the 
+flanks, and the caul above the liver, with the kidneys, it shall he t
+ake away. 
3:5 And Aaron's sons shall burn it on the altar upon the burnt sacrifi
+ce, which is upon the wood that is on the fire: it is an offering mad
+e by fire, of a sweet savour unto the LORD.
[download]

I still need an example of a separate chapter, or are you doing each book separately?

Here is the oneliner:

cat chapter.txt | perl -pe 'chomp; next unless $_; s/(\d+:\d+)/\n${1}/
+;s/\s?$/ /;'
[download]

Note: if you are using Windows, replace the single quotes to double quotes, i.e. perl.exe -pe "..."

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