I have a solution that is nearly the same as Doitsu, but also starts with the upper case to lower case conversion.
<h1>\1\L\2\E<br /> \3\L\4\E</h1>
This will change
<p>TITLE OF CHAPTER</p>
<h1>Two<br /> Title of chapter</h1>
I can't think of a way to get title case for the title of the chapter without a second regex. Maybe someone else can.