why DBD::ODBC (which wrote to the scalar) might need to call SvSETMAGIC?

To assign a value to a scalar, there are a few steps to follow.

• Make sure the scalar has the slot (IV, PV, etc) you need by upgrading the structure if necessary.
• Place the value in the appropriate slot.
• Set the flag indicating there's a usable value in the slot you populated.
• Call SvSETMAGIC to let magic respond to the new value if appropriate (if SMG=1). This will end up calling STORE for tied variables, for example. In this case, I expect that it will clear the precomputed length of the string.

To obtain a value from a scalar, the same is done in reverse.

• Call SvGETMAGIC to populate the scalar with the a value. (This will end up calling FETCH for tied variables, for example.)
• Coerce the scalar into the requested type if necessary. (This may requiring upgrading the scalar).
• Return the value in the appropriate slot.

Some macros and functions do more than one of these steps for you.

Setting $txt = $txt at the end of the loop makes no difference

No, at the start of the loop. After the fetch, but before you use it.

There's no get magic on the scalar (GMG=0), so the fact that the set magic wasn't called earlier work won't matter. But when the value is assigned back to the scalar, the assignment will properly handle the set magic.

If I'm right, I can provide a cheaper workaround than copying the string (which defies the purpose of binding).