Find out what the strings actually look like. You can probably set it up to 'trigger' on a certain byte and take the next byte or the next one, whatever.

Other than that, yes, grab 8, throw 7, send out the 8th. That'll work, as long as the 9600 baud isn't coming in fast enough to overwhelm the 1200 baud data. You could do it completely in software (SERIN/SEROUT) as long as the timing permits and NOTHING could possibly overlap, otherwise, you'll end up using either a combination of hardware/software serial comm's, or maybe some external 'steering' logic...grab the 9600 baud, re-do the baud rate registers, steer the data, send the 1200 baud, re-do the baud registers, re-steer the data, grab the 9600...and so on...
Actually, since you are only RECEIVING 9600 and SENDING 1200, you probably wouldn't have to do any steering at all. Just use the same hardware serial port for both, 9600 on the RX, 1200 on the TX, switch baud rates in mid-stream. Shouldn't be too difficult.