Here is the solution I finally used (in case someone else encounters the same thing)

Problem: Changes to modules aren't seen by mod_perl / mason / apache without an explicit 'apacheclt restart'

Solution First see Apache::Reload. This will solve most cases, except for certain exporting issues. use My::Module qw(testsub); still seems to be using the old version of testsub().
Rewrite the above line to read. use My::Module; My::Module->import(qw(testsub)); which in conjunction with Apache::Reload should fix the problem. All scripts/pages should now see the new subroutine.

---- My::Module.pm ----

package My::Module;
BEGIN {
  use Exporter ();
  use vars qw(@ISA @EXPORT @EXPORT_OK);
  @ISA       = qw(Exporter);
  @EXPORT    = qw();
  @EXPORT_OK = qw(testsub);
}
use strict;
use Apache::Reload;

sub testsub {
    return "module subroutine";
}
1;
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---- test.pl ----

#!/usr/bin/perl
use My::Module;
My::Module->import(qw(testsub));

print testsub(), "\n";

sub testsub { # "local" definition of subroutine
    return "local subroutine";
}
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---- mason enabled index.html file ----

<% $txt %>
<%INIT>
use My::Module;
My::Module->import(qw(testsub));
my $txt = testsub();
</%INIT>
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---- stuff in httpd.conf ----

PerlInitHandler Apache::Reload
PerlSetVar ReloadAll Off
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---- stuff in startup.pl ----

use Apache::Reload;
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Thanks to all who replied, especially tilly.

-Blake