This is a good iteration over the initial idea.
And for multiple matched words, as in case 2, I think it may be better to highlight all the matched words and wait for the user to tap on one of them, since he/she may not have paid attention to the quick flashing words and missed which ones were tappable.
And of course with my design I meant that if the user doesn’t feel like correcting any of the highlighted text, they can send another text and it’ll cancel out the highlighting.
But what I don’t completely agree is the need for extra tap user does to correct single words. Especially when there is high probability that the word the user intends to correct is the one that matches with the pattern. My idea was more into correct it automatically, but give an undo option — similar to delete email without confirmation, but give an undo.