It doesn't handle the preservation of line breaks (ie, only removing lines that contain nothing but whitespace). Nor does it remove leading whitespace.
Below is a fairly simple, single-pass regex that handles all but leading spaces on the first line, so I've added a very simple regex before it:
s/^\s+//;
s{ [^\S\n]* (?: (\n)\s* | [^\S\n]+ ) }{ $1 || ' ' }gex
OT, but the node title made me wonder if there was a reasonable single-pass regex for removing leading and trailing whitespace while collapsing internal whitespace. I can see a lot of approaches that will work, but most seem to get bogged down in unfortunate complexities. Ignoring warnings lets me do:
s{(?<=(\S))?\s+(?=(\S))?}{length($1.$2)?'':' '}gx
Requiring Perl 5.010 means I don't have to ignore warnings:
s{(?<=(\S))?\s+(?=(\S?))}{length(($1//'').$2)?'':' '}gx
Surely we can do better than that. Oh, again requiring 5.010, I can do this:
s{(^)?\s+(\z)?}{$1//$2//' '}gx
That's not too bad. (:
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