Currently, the Replace datastream link won't show up unless you also have the View Datastream History link. Reported by Alex Kent on the mailing list .
The ISLANDORA_VIEW_DATASTREAM_HISTORY permission is explicitly called within template_preprocess_islandora_default_edit() . Note that the correct permission is then checked within theme_islandora_datastream_replace_link().
Not sure if intentional. Pinging Jordan Dukart in case he has any insight on this?
This might be related to
ISLANDORA-1508, which reported a similar convolution of permissions but was never replicated.