This turned out to be a bug - the email Wordlet list isn't even being loaded when HTML email is used... Oops.. <img src="https://www.ubbcentral.com/boards/images/graemlins/laugh.gif" alt="" />
The fix is to insert this line around 641 or so of ubb_new_reply.cgi:
&RequireVars("$vars_config{VariablesPath}/vars_wordlets_email.cgi");
(After "$message = &ConvertReturns..." and before
"my $s = &EmailWordletFixer;"
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Charles Capps
Programmer, Infopop Corporation
Please do not contact me privately for support - post on the board or open a support ticket instead!