Using nearly the same updated version (Ver. 2505, Build 18827.20128), I see the same behavior with the Replace dialog and the ^m code. Word locked up, and after killing and restarting it, a "repaired" copy of the document appeared -- the target word was removed, but there were no page breaks.
Although Microsoft may eventually get around to fixing the bug, I suggest permanently using a different method. Use some version of the following code instead of the .Find.Execute with ^m.
Sub DoReplacement()
Dim strTarget As String
Dim rg As Range
strTarget = "BlahBlahBlahBlah"
Set rg = ActiveDocument.Range
On Error GoTo ErrHdl
With rg.Find
.Text = strTarget
.MatchCase = True
.MatchWholeWord = True
While .Execute
rg.Text = ""
rg.InsertBreak wdPageBreak
rg.Collapse wdCollapseEnd
DoEvents
Wend
End With
Exit Sub
ErrHdl:
MsgBox Err.Number & vbCr & Err.Description
End Sub