I have been able now to add in the rtree to the processing :
using the one from roadnav :
URL: https://roadnav.svn.sourceforge.net/svnroot/roadnav/libsdbx/trunk

The IndexWaysWithRTree reads in two files :
1. the osm file with ways that are converted to bboxs and stored in the rtree
2. the osm file with points that are looked up in the rtree.

it is running quite fast, I have reworked the processing function to take a world object reference so that the data can be reused.

Also, I have experimented with the perl modules :
Algorithm::BreakOverlappingRectangles in BreakOverlapping.pl
and
Algorithm::RectanglesContainingDot in buildindex.pl,
they both take the bounding box text output of the ExtractWays from a given osm file.

mike