No, page breaks are not replaced (and it's ^l not ^L). Moreover, it's ^13 that finds paragraph breaks and ^l that finds manual line breaks (aka formfeeds).
And the pilcrow is just a pilcrow - not a paragraph break (though Word uses pilcrow symbols to display paragraph breaks - just as it uses '¤'symbols to display end-of-cell and end-of-row markers).
The same '¤'symbol is used to display both end-of-cell markers and end-of-row markers. End-of-row markers are typically hidden.