I think you have the correct hook location, you'd want to do something like:
PHP Code:
$post['message'] = str_replace("infinity", "∞", $post['message']);
or if you have more than one potential replacement:
PHP Code:
$find = array("infinity", "pi");
$replace = array("∞", "pi symbol");
$post['message'] = str_replace($find, $replace, $post['message']);
and if you want it to be case insensitive, use str_ireplace() instead (same parameters).
BTW, I see what you posted is from an install xml file. If you're working on it that way you're probably finding it annoying. What you really should do is work on a test site in debug mode, then export the install xml when you're done.