As I said, I need to look at a sample of your data, at least the beginning, to see where and how to put the reference to the entity declarations.
Note that XML::Smart can parse XML 2 different ways: either it uses XML::Parser, which is a real parser and will deal with entities and all the XML features, or it can use its own parse (XML::Smart::Parser, in which case you might be out of luck, according to the docs. If that's the situation you're in, I would consider either using an other XML library, or, if you have to use XML::Smart, pre-processing your XML using xmllint or something similar. Invest a little time now to probably avoid annoying and hard to find bugs in the future.
