in reply to Recursive substitution difficulties

s{(<name>.*?</name>)<value>(.*?)</value>}{
    $1 . join '', map "<value>$_</value>", split /\|/, $2
}seg;

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Better version for 5.10+: 

s{<name>.*?</name>\K<value>(.*?)</value>}{
    join '', map "<value>$_</value>", split /\|/, $1
}seg;

[download]

Update: Oops, didn't pay enough attn to the desired output.

In Section Seekers of Perl Wisdom