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Well, actually this is not the case. It behaves exactly the same as in modperl 1.0. You can use Env::C module (available from CPAN) to easily debug this:
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In any case you probably want to rely on getpwuid($<), rather than $ENV{USER} if applicable.
Unfortunately ci (RCS) uses the USER variable to determine lock permissions for edits.
But using your Env::C::setenv to set USER instead of assigning to $ENV{'USER'} allowed me to remove the ENV assigments from start-up.pl. This'll make my package more turn-key.
Thanks again -- Mark