Replacing references in two columns

For some strange reason no, even when I add the list in your sheet and drag it down.
Although with the 4 rows in your sheet it does work.

I am guessing here, is it because at least in one of the cases, there is no exact same reference value, and as a result, all other instances fail?

http://lh6.ggpht.com/_Z6S8BcbaPTU/Su...-30_024950.png

See attachment.