Well, I think I went overboard in wanting to make up for being less than helpful. I wanted to at least confirm your symptoms, with the idea of lending more credence to the apparent fact that Microsoft lies (gasp!) about limits vis-a-vis environment variables.

So I typed in a simple Perl program as you indicated:

#!/usr/bin/perl -w
#  vim:ft=perl:ts=4:sw=4:et:is:hls:ss=10:
use strict;
use warnings;

    my  $the_cmd    = 'dir';
    printf "About to call system('%s') ...\n", $the_cmd;
    my  $rc = system( $the_cmd );
    printf "Return code from system() call was %d (0x%04X)\n", $rc, $r
+c;
[download]

Then (and in part to remind myself why Perl is *so* much better) I typed in a batch file (WinXPSP2) to test with:

(oh faint of heart - shield your eyes!)

@echo off

:menu1
echo c)lear all
echo f)ill a bunch
echo l)ist them
echo s)ize them
echo r)un Perl program
echo q)uit
set /p zans="what to do? [cflqrs] "
if "%zans%X"=="X" goto menu1
if /i "%zans%"=="c" goto docl1
if /i "%zans%"=="f" goto dofl1
if /i "%zans%"=="l" goto doli1
if /i "%zans%"=="q" goto doqu1
if /i "%zans%"=="r" goto doru1
if /i "%zans%"=="s" goto dosz1
goto menu1

:docl1
set zcount=350
set zcounter=1
:clagain
rem echo I see %zcounter% and %zcount%
if %zcount% LSS 1 goto :menu1
if not defined zenv%zcounter% goto menu1
rem echo Once again, doing zenv%zcounter% ...
set zenv%zcounter%=
set /a zcounter+=1
set /a zcount-=1
goto clagain

:dofl1  ---------------------------------------------------
set /p zans="how many should I fill? "
if "%zans%X"=="X" goto menu1

set zcount=%zans%
echo Will fill %zcount% environment variables with 100-char values

:flagain
if %zcount% LSS 1 goto :menu1
set zenv%zcount%=a123456789b123456789c123456789d123456789e123456789f12
+3456789g123456789h123456789i123456789j123456789
set /a zcount-=1
goto flagain

:doli1
set zenv
goto menu1

:dosz1
set zenv >zenv.size
set >all.env.size
dir zenv.size all.env.size
goto menu1

:doru1
perl -w joinersw1a.pl
goto menu1

:doqu1
echo okay, quitting, bye!
goto :eof

rem vim:ft=dosbatch:ts=2:sw=2:et:is:hls:ss=10:
[download]

I then ran it, asking for increasing numbers of environment variables to be filled with short 100-char strings. I did hit a limit fairly quickly. Below are snippets from the output:

how many should I fill? 260
Will fill 260 environment variables with 100-char values
10/03/2004  23:33            29,983 all.env.size
10/03/2004  23:33            28,492 zenv.size
About to call system('dir') ...
CGI-Application-MailPage-1.2.tar.gz  hexdmpr.pl~      murugu1.pl
    ::      ::     ::
hexdmpr.pl~                          murugu1.pl
Return code from system() call was 0 (0x0000)

how many should I fill? 265
Will fill 265 environment variables with 100-char values
10/03/2004  23:34            30,533 all.env.size
10/03/2004  23:34            29,042 zenv.size
About to call system('dir') ...
CGI-Application-MailPage-1.2.tar.gz  hexdmpr.pl~      murugu1.pl
    ::      ::     ::
hexdmpr.pl~                          murugu1.pl
Return code from system() call was 0 (0x0000)

how many should I fill? 269
Will fill 269 environment variables with 100-char values
10/03/2004  23:36            30,973 all.env.size
10/03/2004  23:36            29,482 zenv.size
About to call system('dir') ...
CGI-Application-MailPage-1.2.tar.gz  hexdmpr.pl~      murugu1.pl
    ::      ::     ::
hexdmpr.pl~                          murugu1.pl
Return code from system() call was 0 (0x0000)

how many should I fill? 270
Will fill 270 environment variables with 100-char values
10/03/2004  23:35            31,083 all.env.size
10/03/2004  23:35            29,592 zenv.size
About to call system('dir') ...
Can't spawn "cmd.exe": No such file or directory at joinersw1a.pl line 9.
Return code from system() call was 65280 (0xFF00)

All I can really offer is that I can reproduce the problem, and quite close to your problem specification. I can't find any documentation at Microsoft that relates, other than their statements about 65MB max limits. (lies!)

But I do feel you should investigate one or more of the several configuration file solutions. I just have to believe it will be more manageable now and in the future.
(once over that little hiccup of totally changing the way you do things (ouch!))