jt_exist,

This is more of a guess about what could be going wrong. Apache may actually be ignoring your request to change @INC. With Apache 1.3.xx, I could do a lot more with Perl cgi then I can do with 2.x.x. Sadly, my experience is that Apache doesn't log the "skip", it just ignores it.

Because of this, I use a persistent Perl script running that talks to the cgi script over sockets. It is painful, but eliminates what Apache with or without mod-perl will do/not do. It's tough enough debugging a cgi script, without having code simply being ignored

Maybe someone will have a better answer.

UPDATE:I started my answer before your update, and I'm glad you solved your problem.

Good Luck.