Replying to myself, here is a corrected and simplified version:

#!/usr/bin/perl

use Test2::V0;

#FROM DATABASE TEXT
my $line = "Her house is on 34th Mt. Whitney St. near St. Mt. Helens S
+t.";

#FROM INCOMING FORM INPUTS
my $query = qr'(St\.\s)(Mt\.\s)(?=Helens)';
my $substitution = 'Mount ${1}';    # USER MAY HAVE ENTERED "$1"

#FOR RETURNED HTML HIGHLIGHT OF CHANGES
my $start = '<span class="highlight">';
my $end = '</span>';

my $replace = $start . $substitution . $end;
eval "\$line =~ s{\$query}{$replace}g;";
die $@ if $@;

is $line, 'Her house is on 34th Mt. Whitney St. near <span class="high
+light">Mount St. </span>Helens St.', 'pattern substitution';
done_testing;
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