Why does $1 work inside some tokens but not others?

[griffman]

I just had to hunt this down last night, and the answer is "it's designed to work that way." Here's Peter explaining why:

@peternlewis

Since the replace field in this case is a variable, that variable cannot contain any other expansion facilities, such as $1.

Basically, as I understand it, it's a decision made due to not being able to fully decide what $1 should be in a given expansion.

-rob.