Ok, this appears to be working, except for one thing: for the backreferenced sections, spaces are getting prepended with a backslash in the $to clause, and subsequently in the $string. Here's a test I added:

[ 'Once upon a time, Jack Roush was not the king of the NASCAR garage,
+ but a stock-car outsider from Michigan trying to start a Winston Cup
+ team with a small-time budget.', '(king of the NASCAR )(garage, but 
+a stock-car)', 'HERE1$1HERE2$2HERE3' ]
[download]

And here's the output:

[Once upon a time, Jack Roush was not the king of the NASCAR garage, b
+ut a stock-car outsider from Michigan trying to start a Winston Cup t
+eam with a small-time budget.]
...

[Once upon a time, Jack Roush was not the HERE1king\ of\ the\ NASCAR\ 
+HERE2garage\,\ but\ a\ stock\-carHERE3 outsider from Michigan trying 
+to start a Winston Cup team with a small-time budget.]
[download]

Any ideas? I can't see where these backslashes are coming from...!