Neat trick, though it won't handle very long strings. (What's with the indentation btw?)

Here's a non-tricky solution:

use Set::CrossProduct;

sub casify {
    my @letters = map [ uc $_, lc $_ ], split //, $_[ 0 ];
    return(
        map join( '', @$_ ),
        Set::CrossProduct->new( \@letters )->combinations;
    );
}
[download]

:-) Of course, it runs much slower, in case that really is a concern…

Makeshifts last the longest.