How do I make the installer perform a string substitution as part of the installation?

You can perform string substitutions with the substitution action. This action allows you to specify pattern/value pairs that will be substituted in certain files. It takes a list of glob file patterns separated by ';' and a list of the pattern/value pairs.

       <substitute>
         <files>*/launcher/launchMyJavaApp.sh;*/bin/*.sh</files>
         <substitutionList>
           <substitution>
             <pattern>@@INSTALLDIR@@</pattern>
             <value>${installdir}</value>
           </substitution>
           <substitution>
             <pattern>@@JAVADIR@@</pattern>
             <value>${installdir}/jre</value>
           </substitution>
         </substitutionList>
       </substitute>

Suppose the user sets /home/user/application as installdir and the original launchMyJavaApp.sh looked like:

#!/bin/sh
export MYAPPDIR=@@INSTALLDIR@@
@@JAVADIR@@/bin/java com.some.class.Name

Then the script will look like the following after installation:

#!/bin/sh
export MYAPPDIR=/home/user/application
/home/user/application/jre/bin/java com.some.class.Name

You can find more information about this action in Actions section of the product documentation included with InstallBuilder.