stringUtil.substitute (str:String, … rest):String {} as below. By just avoding using regExp. Because in RegExp “$” is used as the metacharcter so it has got Special meaning.

public static function substitute1(str:String, ... rest):String
    {
        if (str == null) return '';

        // Replace all of the parameters in the msg string.
        var len:uint = rest.length;
        var args:Array;
        if (len == 1 && rest[0] is Array)
        {
            args = rest[0] as Array;
            len = args.length;
        }
        else
        {
            args = rest;
        }

        for (var i:int = 0; i < len; i++)
        {
            str = str.replace("{"+i+"}", args[i]);
        }

        return str;
    }

Can you please file a bug at http://bugs.adobe.com/flex/ and include a simple test case, if possible.

Peter