As a neophyte it initially looks like the same reference is being sequentially updated with new substitutions and it'll simply end up with the last value.

well sort of. What happens is that all the occurances of the string %HTTP_HOST% will be replaced with whatever is returned from &handleEnvVariable('HTTP_HOST') in $_[0], and THEN all the occurances of the string '%REMOTE_ADDR%' will be replaced with whatever is returned by &handleEnvVariable('REMOTE_ADDR')... and so on. . .

So in each line the string is modified by substitutions if the pattern exists in the line.

It could be shortened down to:

$_[0] =~ s/%
            (HTTP_HOST|
              (?:REMOTE_
                  (?:ADDR|PORT|USER))
           %/&handleEnvVariable($1)/gex;
[download]

You might want to take a look at perlop(Regexp Quote-Like Operators) and perlre for more info.

-enlil