#!/bin/bash

t=$(mktemp -t -d awkinator2.XXXXXXXXXX) || exit
cd "$t"
trap 'rm -rf "$t"' EXIT ERR

cat <<\: >file1.txt
Name	Latin-small	Roman	Latin-caps
F0	a	I	A
F1	b	II	B
F2	c	III	C
F3	d	IV	D
:

cat <<\: >file2.txt
Lorem ipsum
Roman here.
LCaps here.
LSmall here.
Lorem ipsum
:
# Trim the obnoxious header
tail -n +2 file1.txt |
while read -r directory LSmall Roman LCaps; do
    mkdir "$directory"
    awk -v LSmall="$LSmall" -v Roman="$Roman" -v LCaps="$LCaps" '
        BEGIN { split("LSmall:Roman:LCaps", k, /:/)
            split(LSmall ":" Roman ":" LCaps, r, /:/) }
        {
            for (j=1; j<=3; ++j)
                if ($0 ~ k[j]) {
                    gsub(/here/, r[j])
                    break
                }
        }1' file2.txt >"$directory"/"$directory".txt
done

tail */*.txt