Using the same names is perfectly acceptable, as long as the names make sense in the context where they're used. I'd actually argue against $temp_length: is this a temporary variable that is needed so that the subroutine can perform its algorithm, and we'll be using the $length in the outer scope as well, or is it something else?

I personally just pass all the variables I need in, assign @_ to a list of variables on the first line of the subroutine, and use the names that seem most appropriate to describe what I'm doing. This may mean that in, for instance, a module that munges strings, that I have $string in several different subroutines.

Whatever keeps the algorithm clear in the reader's mind is what you want to use.