I think the second step is the one that's not clear. Here's how my solution works:

Read and print from TEMPLATE until <!-- MAIN -->.
Read but don't print from TEMPLATE until <!-- ENDMAIN -->.
Read and print everything from FORMTEMPLATE.
Read and print everything that's left from TEMPLATE.
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I figured that <!-- MAIN --> and <!-- ENDMAIN --> may contain some text that should be replaced by the form. The second loop just skips over all of that.