No, I do not see /root/perl in @INC whether I run as root or as my own account (even after fiddling with PERLLIB).
Do you mean that the following two commands give the same results in respect to @INC? They shouldn't.
$ PERL5LIB= perl -V
$ PERL5LIB=/home/me/perl/lib/perl5 perl -V
when you say, "set the following options in the CPAN", is that code I should be adding/tweaking in CPAN.pm, or is there some other configuration file/setting I need to mess with?
Those were the commands to put at CPAN's shell prompt. I forgot to mention that you should issue o conf commit after that, but cpan should inform you about that.
Alternatively, you can modify settings directly in ~/.cpan/CPAN/MyConfig.pm. It's safe as long as you just play with it as a casual user. This is a big plus in this approach: when experimenting with local installation dir, if you break something, just remove destination folder (~/perl in my example) and ~/.cpan and you have clean environment. You loose all your settings, but hey, this is how experimenting works. :)