I need a utility which will scan in a text file and search and replace strings. I also want to keep track of how many strings I've replaced. The following is an example paragraph and which text to replace.

"Bill Gates" with "Mr. Noodles",
"Gates" with "Noodles",
"Paul Allen" or "Allen" as "The Other Guy",
"Altair" as "WTF",
"Apple" as "The Prodigal Son",
"Tandy" as "Who?"
and "Microsoft" as "Blue Screen of Death"

"Bill Gates was born in Seattle in 1955, the second of three children in a well-to-do family. His father, William H. Gates II, was a lawyer, while his mother, Mary Gates, was a teacher, a regent of the University of Washington, and member of several corporate boards. Gates was first exposed to computers at school in the late 1960s with his friend Paul Allen, the son of two Seattle librarians. By the time Gates was 14, the two friends were writing and testing computer programs for fun and profit.
In 1972 they established their first company, Traf-O-Data, which sold a rudimentary computer that recorded and analyzed traffic data. Allen went on to study computer science at the University of Washington and then dropped out to work at Honeywell, while Gates enrolled at Harvard. Inspired in 1975 by an issue of Popular Electronics that showed the new Altair microcomputer kit just released by MITS Computer, Gates and Allen wrote a version of BASIC for the machine. Later that year Gates left college to work full time developing programming languages for the Altair, and he and Allen relocated to Albuquerque, New Mexico, to be near MITS Computer, where Allen took a position as director of software development. Gates and Allen named their partnership Micro-soft. Their revenues for 1975 totaled $16,000.
A year later, Gates published "An Open Letter to Hobbyists" in the Altair newsletter, in which he enjoined users to avoid illegally copied software. Arguing that software piracy prevented "good software from being written," Gates wrote prophetically, "Nothing would please me more than being able to hire ten programmers and deluge the hobby market with good software." In November 1976 Allen left MITS to devote his full attention to Microsoft, and the company's tradename was registered. In 1977 Apple and Radio Shack licensed Microsoft BASIC for their Apple II and Tandy computers, with the Apple license going for a flat fee of $21,000. As Apple sold a million machines complete with BASIC, Microsoft's unit revenues dropped to two cents a copy.
That same year Microsoft released its second programming language, Microsoft FORTRAN, which was followed in 1978 by a version of COBOL. Both were written for the CP/M operating system, one of many available in the rapidly expanding but still unstandardized microcomputer market. As CP/M was adopted by computer manufacturers including Sirius, Zenith, and Sharp, Microsoft became the leading distributor for microcomputer languages. By the end of 1978 Microsoft had 13 employees, a sales subsidiary in Japan, and $1 million in revenues. The following year Gates and Allen moved the company to Bellevue, Washington."

Try "gawk". If you're not familiar with it, go to http://www.gnu.org/manual/gawk/gawk.html for an introduction.

How about
This is pretty much straight forward.

I did run the command you posted and it worked, but what I'm looking for is my own script that I can run that will search and replace the text and keep track of how many strings have been replaced.

What do you mean by your own script ?

Do you want to the user to input values (old values and new values) ?

Could you please give an example, I generally use sed for this purpose.

Yes

The following script reads in a file (supplied by a line argument) line by line into a varilable called linein:

#!/bin/bash
#sample code for reading in a file line by line.
fileIn=$1

while read linein
do
echo $linein
done < $fileIn

The following snippet replaces the first occurance of a substring inside of a string variable:

${stringZ/abc/xyz} #This looks at a string named 'stringZ' and would replace the first occurance 'abc' with 'xyz'

This snippet replaces ALL occurances of the substring inside of a string variable:

${stringZ//abc/xyz}

So now you need to put it all together:
your script will work like this:

fileStringReplace <filename> <stringToSearchFor> <stringToReplaceWith>

It will replace 'stringToSearchFor' with 'stringToReplaceWith' inside 'filename'. It will return how many strings were replaced.

I am curious how far you have thought this through, what happens if the paragraph looks like this:

Strictly speaking this is "Bill Gates", but I believe your solution will end up calling him "Bill Noodles" and not "Mr. Noodles"

I guess that could possibly happen.

Well my previous issue aside I would use awk and have two files, one with your text and the other as a delimetered listing of changes.

pseudo code:

Read first file into an array to be looped over for the changes.
For each line in the second file:
a - make necessary changes
b - count each change into its own array based on change name

Hi grail,

that is a very good point. I totally did not take this into consideration. So here is a modified approach which will also be able to handle input parameters:
This will not work if Bill



Gates
spans over more than one line. This could be handled by adjusting the according quantifier. There might also arise some issues when passing parameters which contain special characters like '.'. In this case they should be escaped accordingly.

Well I will let you play with the particulars of words over multiple lines, but the following works with the current input:

This would be called in the following way with input_file containing your text above:
From this my output looks like: