Here's the top-level structure of my solution:

    public static void main(String args[])
    {
        processFile(args[0]);
    }

    private static void processFile(String filename)
    {
        try {
            BufferedReader br = open(filename);

            while ((line = br.readLine()) != null)
            {
                if (line.startsWith(INCLUDE))
                {
                    ...
                    processFile(incfile);
                }
                else if (line.startsWith(DEFINE))
                    doDefine(line);
                else
                    doLine(line);
            }
        } catch (IOException e) {}
    }

p.s.
Remember that a4/lpp-processLine has a line-processing algorithm.