You have to check that there is still space free when the OOK flag is true and update the IV also:

...
if (SvOOK( n ) && (SvIV(sv) > 0)) { /* If we've some reserve left use 
+it */
    SvLEN_set( n, SvLEN( n ) +1 );
    SvCUR_set( n, ++l );
    SvPV_set( n, --a );
    SvIVX(sv)--; 
}
...
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