You were really close -- change "char" to "chr", add "e" at the end, and drop the dash between 9 and A:

perl -i.bak -pe 's/\%([0-7][0-9A-F])/chr(hex($1))/ge'
[download]

Bear in mind that values %00-%1F and %7F won't be things that you can "read" very well -- in fact, if you encounter %0D without an adjacent %0A, the resulting display could be very misleading. You might want to limit the regex to:

s/\%([2-6][0-9A-F]|7[0-9A-E])/chr(hex($1))/ge
[download]