There are ridiculously complicated ways to overcome this but the easieast solution I was able to find around is the following:
UPDATE myTable SET myField = REPLACE(SUBSTRING(myField, 1, DATALENGTH(myField)), 'string2replace', 'replacementString')
SUBSTRING is returning VARCHAR so this way it works like charme.
I HATE SQL but I am getting to know more than I would like about it.
as pointed out by people in the comments, the above will truncate to 8000 characters. This wasn't a concern for me at all because I knew my strings where pretty short. If you're worried about truncation you can use a CAST (check comments for more details).