Anything wrong with string.Template? This is in the standard Python distribution and covered by PEP 292:

from string import Template

form=Template('''Dear $john,

I am sorry to imform you, $john, but you will not be my husband
when you return from the $theater war. So sorry about that. Your
$action has caused me to reconsider.

Yours [NOT!!] forever,

Becky

''')

first={'john':'Joe','theater':'Afgan','action':'love'}
second={'john':'Robert','theater':'Iraq','action':'kiss'}
third={'john':'Jose','theater':'Korean','action':'discussion'}

print form.substitute(first)
print form.substitute(second)
print form.substitute(third)

Best suggestion: try them all. It won't take long.

My favourite: Jinja2 (by a mile)

It has decent syntax, can trace errors through it, and is sandboxable.

You can use the standard library string and its Template class.

Given an input file foo.txt:

$title
$subtitle
$list

And this code in example.py:

from string import Template

d = {
    'title': 'This is the title',
    'subtitle': 'And this is the subtitle',
    'list': '\n'.join(['first', 'second', 'third'])
}

with open('foo.txt', 'r') as f:
    src = Template(f.read())
    result = src.substitute(d)
    print(result)

Then run it:

$ python example.py
This is the title
And this is the subtitle
first
second
third