As I said, I don't claim that exists is a more efficacious way to induce autovivification than defined (or than anything else for that matter), but rather that it is a bad test to use, since there is the possibility of unintended autovivification happening anywhere else, and when this happens exists gives misleading results. In other words, using a slight modification of your example (s/defined/exists/):

my %hash = ( Key1 => { john => 1, pete => 2 },
             Key2 => { frank => 3, howard => 4 } );
print "Exists!\n" if exists $hash{Key7}{ted};
print "Key7 exists!\n" if exists $hash{Key7};
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it is the second exists that I find problematic is not the first one, because it is the second exists that gives the misleading result (yes "Key7" exists but for the wrong reason). I'd just as soon have both tests fail, by using defined instead of exists for both.