There is going to be a problem with your sed line as the semi-column is not helping matters. You can try using a database for easy retrieval with your script. I hope it puts you on the way.
> Can I use thisWhy don't you just try it and see if it works?
>
> for i `cat list.txt` | sed 's/Chloe/$i.1; /CA/$i.2/g' $i.letter.txt
>
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