It looks like i had a scope problem a little further up in the code. the only reason i noticed it was because i attempted to run your code with the addition on an undelcared var. i.e.

#!/usr/bin/perl

use strict;
use warnings;
my $foo = undef;

# No warning
my $line = 'substitute for $foo in $bar here';
$line =~ s/(\$\w+)/"defined $1 ? $1 : ''"/eeg;
print $line, "\n";
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hairbear% ./test2.pl
Use of uninitialized value in substitution iterator at ./test2.pl line
+ 11.
substitute for  in  here
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Edit by tye: remove PRE tags around long lines