Standard practice is to put your key/values into a hash and loop through your text once.

my %hash = (
    vars => 'vars',
    this => 'this',
    doink => 'doink',
    dink => 'dink',  
);

while(<DATA>) {
    s/\[([^]]+)\]/$hash{$1}/g;
    print;                    
}
 
__END__
<h1>Some beginning HTML up here</h1>

<update>
interpolate [vars] when they
are<p> between brackets like [this].
<p> <a href="[doink]">[dink]</a>
</update>

<small>The ending HTML down here</small>
[download]

If you want, you can use HTML::Parser or something so it only looks at whatever's between the <update> tags (or, if as gryphon surmised, you want to run through <update> many times.)