help learning "re"

[Pete J Shinners]

i'm trying to get the hang of these regular expression

i'm trying to write a function that takes two filenames
and copies one to the other. while it is copying i want
it to scan for any environment variable names and substitute
the expanded value.

sounded like a fabulous time to learn the regexp.
sadly it doesn't work. the code runs, but none of the
variables are found or substituted

here's what i expected to work
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import os, re


def subvar(regfind):
    "callback for regex substitution"
    var = regfind.group(0)[1:]
    print 'REGEX found var:', var #temp debugging. never gets here
    return os.environ.get(var, '$'+var)


def smartcopy(source, dest):
    "copies files. substites env.variables with values"
    srcfile = open(source, 'r')
    dstfile = open(dest, 'w')
    regexp = re.compile(r"\$[0-9A-Z_]+")
    while 1:
        line = srcfile.readline()
        if not line: break
        regexp.sub(subvar, line)
        dstfile.write(line)

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surely this can be done correctly, but how?