OK, so here the problem is that the filter opions do not operate when using the twig_print_outside_roots. At least they are not applied to the data outside the roots. Which makes sense as you are supposed to only care about what's inside the roots, that's the whole point of the "roots mode".

Below is a way of solving your problem. I must say I would not use it though. Instead I would do a pre or post processing of the data, using regexps or maybe Text::Unidecode, to replace the characters you don't want. I assume you want to replace those characters everywhere in the document, so most likely you don't need to use an XML aware tool.

#!/usr/bin/perl

use strict;
use warnings;

use XML::Twig;

my $t = XML::Twig->new( twig_handlers => { hl1 => \&fix_hl1,
                                           hl2 => \&fix_hl2,
                                           _all_ => \&fixup,
                                         }, 
                         keep_encoding => 1,
                         keep_spaces => 1,
                     )
                 ->parse( \*DATA);



sub fixup
  { my( $t, $elt)= @_;
    foreach my $pcdata ($elt->children( '#PCDATA'))
      { $pcdata->set_text( conv_chars( $pcdata->text)); } 
    $elt->flush unless( $_->in( 'hl1') || $_->in( 'hl2'));
  } 

sub conv_chars { my $t= shift; $t=~ s{—}{--}g; return $t; }
sub fix_hl1 { $_->set_tag( 'new_hl1')->prefix( 'fixed hl1:'); }
sub fix_hl2 { $_->set_tag( 'new_hl2')->prefix( 'fixed hl2:'); }

__DATA__
<!DOCTYPE nitf [
<!ENTITY foo "bar"> ]>
<nitf><s><hl1>hl1 with a &foo; and an other &foo; and &#8212; and &#82
+12;</hl1>
         <p>text, no foo</p>
         <p>text, no foo but &#8212;</p>
         <p>text, with &foo;</p>
         <hl2>hl2 with a &foo; and an other &foo; and &#8212; and &#82
+12;</hl2>
         <hl2>hl2 no foo </hl2>
         <hl2>hl2 with a bold <b>&foo;</b>, <b>&#8212;</b> and an othe
+r &foo;</hl2>
      </s>
</nitf>
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