It looks to me like your problem is elsewhere. One question I have is why you're using grep there. But the regexp does what it's supposed to.

#shortened for clarity, but works with the full thing
$_ = '<*ra0*p(9,-9,0,9,0,0,g,"U.S. English")><Bz8>ATTN: Out of school 
+youth';
s/(<Bz8>)([^ ]*)/$1$2<\$>/;
print;
[download]

prints

<*ra0*p(9,-9,0,9,0,0,g,"U.S. English")><Bz8>ATTN:<$> Out of school you
+th
[download]

on my system.