I just sent you an email, but I thought I should post here too, in case someone else wants to do this. I had the wrong symbols in the Find and Replace boxes. It should read this way:
Find: (leave blank, all you need is format selected) Font:Italic
Replace with: < i >^&< i/ > Font:Not Bold, Not Italic
no subject
Find: (leave blank, all you need is format selected)
Font:Italic
Replace with: < i >^&< i/ >
Font:Not Bold, Not Italic