There might be a simpler way to do a replace of all occurences of a string in a SQL TEXT field, but this is the solution I came up with way back when. I needed it again tonight so I figured I might as well pin it to the interwebs.
-- UPDATE [TableToUpdate]
-- SET [Column] = cast(replace(cast([Column] as varchar(max)),'[StringToReplace]','[ReplacementText]') as text)
-- WHERE [Column] like '%[StringToReplace]%'