Replace a char with a string dynamically

declare @a table(col1 varchar(max))
insert into @a select 
'DDDDDDDDDDDDDDDDDDDDDDDDDDDDXXXXXXXXXXXXXXXXXXXX
DDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDD
DDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDD4444DDD'


declare @LKPTable table(col2 varchar, col3 varchar(3))
insert into @LKPTable select
'D', 'SXM'
union all select
'X', 'DSN'
union all select
'4', 'MXD'

;with staging as(
        select ROW_NUMBER () over (order by (select 1)) as rn, col1, len(col1) as column_length
        from @a
)

, max_row as(
        select max(len(col1)) maxrow 
        from @a
)


, multicast_row as(
        select 1 as cnt
        union all
        select cnt + 1 
        from multicast_row
        where cnt < (select maxrow 
                                from max_row)
)

, join_back as(
        select cnt, SUBSTRING(col1, cnt, 1) character, staging.*, (select col3 from @LKPTable b where SUBSTRING(col1, cnt, 1) = b.col2) lookup_value
        from staging, multicast_row
        where len(col1) >= cnt
)

, pivot_back as(
        select col1, (select cast(lookup_value as varchar(max)) from join_back b where a.col1 = b.col1 order by cnt for xml path('')) string
        from staging a 
)
select * 
from pivot_back
OPTION (MAXRECURSION 0);