# If you'd like to omit non-matching lines from the result; add ';d' to the end of the expression.
sed -E 's/(<blockquote>(?:(?!<\/?blockquote).)*?)<p>(.*?)<\/p>((?:(?!<\/?blockquote).)*<\/blockquote>)/\1<div>\2<\/div>\3/sg;t' <<< "<blockquote>
<div>paragraph 1</div>
</blockquote>
<p>paragraph 1 outside blockquote</p>
<blockquote>
<div>paragraph 2</div>
<p>paragraph 3</p>
</blockquote>
<p>paragraph 2 outside blockquote</p>"
Please keep in mind that these code samples are automatically generated and are not guaranteed to work. If you find any syntax errors, feel free to submit a bug report. For a full regex reference for SED, please visit: https://www.gnu.org/software/sed/manual/html_node/The-_0022s_0022-Command.html