On my machine "." is in @INC. On tye's machine as well. What about yours? tye relies on "." himself within his CPAN modules (last night in the cb after you left).
In an automated CPAN build, it is my understanding that "make test" is run at the project root. The list of files that the generated Makefile file passes in the test target by default (if you don't configure "test") uses paths relative to project root, implying that it expects to be run with cwd set to the project root. The "disttest" target in the makefile, which is supposed to emulate testing in a distribution cd's to $DISTVNAME before running tests. Are you aware of circumstances where CPAN runs "make test", "make install" from some other current directory?