You can do this in XML::Twig by creating the element with the parse method:

#!/bin/perl -w
use strict;

use XML::Twig;

# create and load the twig (with pretty_print option)
my $twig= new XML::Twig( pretty_print => 'indented');   
$twig->parse( \*DATA);

# get the insertion spot, you could also use the get_xpath method
my $insert= $twig->root->first_child( 'insert');

# parse the text into a twig element
my $text="<p>this is a paragraph with some <abbrev>XML</abbrev> in it<
+/p>";
my $elt= parse XML::Twig::Elt( $text);

# replace the <insert> element by the new one, you
# can use $elt->insert  to... insert  the element
$elt->replace( $insert);

# out we go!
$twig->print;
print "\n";

__DATA__
<?xml version="1.0"?>
<doc>
  <elt>just a filler</elt>
  <insert />
  <elt>just another filler</elt>
</doc>
[download]

You can go to the XML::Twig page for more info, including a new Quick Ref page to sort out the important from the rest in the doc ;--)