Well, I’m not going to even try understanding the various features used in that sed command. I do know how to use basic loops with labels, but I never bothered with all the buffer manipulation stuff. I’d rather use awk/perl/python for those cases.

This might work, but I think it is best to not tinker further if you already have a working script (especially one that you understand and can modify further if needed).

perl -pe 's/\[[^]]+\]\((?!https?)[^#]*#\K[^)]+(?=\))/lc $&=~s:%20|\d\K\.(?=\d):-:gr/ge'

Hmm, OP mentioned “Only edit what’s between parentheses” - don’t see anywhere that whole URL shouldn’t be changed…

Here’s a solution with perl (assuming you don’t want to change http/https after the start of ( instead of start of a line):

perl -pe 's/\[[^]]+\]\(\K(?!https?)[^)]+(?=\))/lc $&=~s|%20|-|gr/ge' ip.txt

• e flag allows you to use Perl code in the substitution portion.
• \[[^]]+\]\(\K match square brackets and use \K to mark the start of matching portion (text before that won’t be part of $&)
• (?!https?) don’t match if http or https is found
• [^)]+(?=\)) match non ) characters and assert that ) is present after those characters
• $&=~s|%20|-|gr change %20 to - for the matching portion found, the r flag is used to return the modified string instead of change $& itself
• lc is a function to change text to lowercase