import re
pattern = re.compile("hello", re.IGNORECASE)
pattern.sub("bye", "hello HeLLo HELLO")
# 'bye bye bye'

Expanding on Mark Byers' answer, Here's a solution which works for replacement text of any length.
The trick is to send a function to re.sub().

import re
def case_sensitive_replace(string, old, new):
    """ replace occurrences of old with new, within string
        replacements will match the case of the text it replaces
    """
    def repl(match):
        current = match.group()
        result = ''
        all_upper=True
        for i,c in enumerate(current):
            if i >= len(new):
                break
            if c.isupper():
                result += new[i].upper()
            else:
                result += new[i].lower()
                all_upper=False
        #append any remaining characters from new
        if all_upper:
            result += new[i+1:].upper()
        else:
            result += new[i+1:].lower()
        return result

    regex = re.compile(re.escape(old), re.I)
    return regex.sub(repl, string)

print case_sensitive_replace("abc Abc aBc abC ABC",'abc','de')
print case_sensitive_replace("abc Abc aBc abC ABC",'abc','def')
print case_sensitive_replace("abc Abc aBc abC ABC",'abc','defg')

Result:

de De dE de DE
def Def dEf deF DEF
defg Defg dEfg deFg DEFG

Put \b at the beginning and ending of the regex.

Using re is the best solution even if you think it's complicated.

To replace all occurrences of 'abc', 'ABC', 'Abc', etc., with 'Python', say:

re.sub(r'(?i)abc', 'Python', a)

Example session:

>>> a = 'abc  asd   Abc  asd  ABCDE    XXAbCXX'
>>> import re
>>> re.sub(r'(?i)abc', 'Python', a)
'Python  asd   Python  asd  PythonDE    XXPythonXX'
>>> 

Note how embedding (?i) at the start of the regexp makes it case insensitive. Also note the r'...' string literal for the regexp (which in this specific case is redundant but helps as soon as you use a regexp that has backslashes (\) in them.