So - here's the cause for the problem - in case someone else runs into something similar in the future.
in reply to Windows 7: fork in perl script spawns new cmd window
The svn.exe binary was included in a directory that has elevated execution rights associated through a policy. The perl binary is not in that same directory, so Win7's kernel refused to run the svn command in the same process space.
Moving the svn binary out of this directory, or moving the perl tree into this directory resolves the problem.