After more thought, I think I came up with a clearer description of the recursive version.

The simple definition is that the hash for the new signature opcode should simply assume that the normalized txid system was used since the beginning.  All txids in the entire blockchain should be replaced with the "correct" values.

This requires a full re-index of the blockchain.  You can't work out what the TXID-N of a transaction is without knowning the TXID-N of its parents, in order to do the replacement.

The non-recursive version can only handle refunds one level deep.