Looking for a serial 9800 baud device that can input a string and output a modified string
You haven't stated how much computing is needed to transform the input to the output, but I'd use a simple, self-contained, 8-bit microcontroller, such as the Silican Labs C8051F305. Something like this will require very few external components, though you will need a logic-level-to-RS232 converter chip and a  few misc. components, such as decoupling caps.

The micro above has 2KB of flash, 128 bytes of RAM, UART and does not require an external oscillator/crystal. It costs around US$2.00 in single quantities.