I'm not sure of the upper limits, but I'm sure you'll get an error like "too many nested somethings". You may want to do it like this, it's easier to read, too:
stringvar replaceme;
replaceme := Replace(uppercase({EMPLOYEE.ADDR1}&' '&{EMPLOYEE.ADDR2}),"STREET","ST");
replaceme := Replace(Replaceme,"AVENUE","AVE");
replaceme := Replace(Replaceme,"ROAD","RD");
replaceme := Replace(Replaceme,"ETC.","ETC");
...
replaceme