Looks like I was beaten to it by mkeast, but for what it's worth here's my version

CREATE FUNCTION dbo.Translate (@source varChar(8000),@replaceRequired varChar(200),@replaceWith varChar(10))

RETURNS varchar(8000) AS 

BEGIN

 declare @i int

 declare @checkLen int

 select @checkLen = Len(@replaceRequired) +1 

 set @i = 1

 while @i < @checkLen

 begin

 select @source = replace(@source,substring(@replaceRequired,@i,1),@replaceWith)

 set @i = @i+1

 end

 Return @source

END