Instead of changing the tildes, use them as anchors to change the characters around them.

s/(\w)~(\w)/$1\n$2/g
[download]

--marmot

UPDATE: Changed second $1 to $2. Stupid fingers...

UPDATE2: Just realized it was wrong, as well. What was I thinking??? This should do it.

s/~/\n/g;
chomp;
[download]