Using 3.2alpha #4599 image straight off the server I see the following 
behavior:

Open a workspace and type stuff with repeated occurrences of a word.
If I highlight the word and type in a replacement, then select do it again,
the next occurrence is deleted.  Repeated do it again's repeatedly delete.

I believe do it again is supposed to search and replace in this context.

If I use the keyboard shortcut (alt-j) same behavior.

If I first "find" the word, entering it in the find popup box, then type in 
the new value, then "do again" same behavior.

Smalltalk vmVersion 'Squeak3.1alpha of 28 February 2001 [latest update: #4044]'
This is on Windows 2k, though I'm seeing similar behavior on Linux.