Try setting $len to 5. You'll see that the 'tight' version fails to wrap correctly under certain circumstances like this

Wrapping:
@[0;7mCoruscate@[0m says this is a test of the line wrapping code

Tight code1:
@[0;7mCoruscate@[0m says this is a test of the line wrapping code

Tight code:
@[0;7mCorus
cate@[0m says this is a test of the line wrapp
ing code
[download]

which suggested to me that the regexes be executed in opposite order

Wrapping:
@[0;7mCoruscate@[0m says this is a test of the line wrapping code

Tight code1:
@[0;7mCorus
cate@[0m says this is a test of the line wrapp
ing code

Tight code:
@[0;7mCorus
cate@[0m
says
this
is a
test
of
the
line
wrapp
ing
code
[download]

which seems to do the trick. I believe the first regex gets stymied by lines that have to be split many times at a space, as well as being split many times inside a word.