replace(id, *options_for_render)

Replaces the "outer HTML" (i.e., the entire element, not just its contents) of the DOM element with the given id.

options_for_render may be either a string of HTML to insert, or a hash of options to be passed to ActionView::Base#render. For example:
  # Replace the DOM element having ID 'person-45' with the
  # 'person' partial for the appropriate object.
  page.replace 'person-45', :partial => 'person', :object => @person

This allows the same partial that is used for the insert_html to be also used for the input to replace without resorting to the use of wrapper elements.

Examples:
  <div id="people">
    <%= render :partial => 'person', :collection => @people %>
  </div>

  # Insert a new person
  #
  # Generates: new Insertion.Bottom({object: "Matz", partial: "person"}, "");
  page.insert_html :bottom, :partial => 'person', :object => @person

  # Replace an existing person

  # Generates: Element.replace("person_45", "-- Contents of partial --");
  page.replace 'person_45', :partial => 'person', :object => @person

Source: show | on GitHub
replace_html(id, *options_for_render)

Replaces the inner HTML of the DOM element with the given id.

options_for_render may be either a string of HTML to insert, or a hash of options to be passed to ActionView::Base#render. For example:
  # Replace the HTML of the DOM element having ID 'person-45' with the
  # 'person' partial for the appropriate object.
  # Generates:  Element.update("person-45", "-- Contents of 'person' partial --");
  page.replace_html 'person-45', :partial => 'person', :object => @person

Source: show | on GitHub