The chief purpose of this paper is to examine the nature of optical transitions that are responsible for the broad bands in the room temperature excitation spectrum of Ce³⁺, Pr³⁺ and Tb³⁺ impurities in RE₂BaZnO₅. This goal is accomplished by constructing the vacuum referred binding energy (VRBE) scheme for the rare-earth ions from the optical data that is available in the archival literature. The resulting VRBE scheme provides convincing evidence for associating the broad band in the excitation spectra of Pr³⁺ (and Tb³⁺) to intervalence charge transfer (IVCT) transition. This refutes the usual assignment of this band to the 4fⁿ →4f^n-15d¹ optical transition. The excitation band for Ce³⁺ is associated with the 4f¹→5d¹ transition and the luminescence with impurity-trapped exciton emission. The dominance of Pr^{3+ 3}P_J emission in Gd₂BaZnO₅ is consistent with the predictive placement of the Pr^{3+ 3}P_J levels much below the host lattice exciton state. We reanalyze the reported energy transfer within the Ce-Yb couple in Gd₂BaZnO₅ and conclude that the tetravalent cerium (Ce⁴⁺) ion is responsible for the energy transfer energy to Yb³⁺. For Y₂BaZnO₅, band structure calculations indicate that the host lattice excitation band is due to electronic transition from the O 2p state (top of the valence band) to the Y 4d and Zn 4s states (bottom of the conduction band).