Okay, after a very negative-emotional day I've sussed it.
I was reading from the file thus:
$src = file_get_contents('http://localhost/foo.php');
So, however I tried to escape the contents of $src, it was too late because the PHP had already been parsed.
And if it had been possible, that would be a pretty sizeable security hole I guess. Wish I could think like a sysop...