How to rewrite Location response header in a proxy setup with Apache?

ProxyPassReverse

ProxyPassReverse should do this for you:

This directive lets Apache adjust the URL in the Location, Content-Location and URI headers on HTTP redirect responses.

I'm not sure why your reverse proxy isn't behaving this way already, assuming you're using a pair of ProxyPass and ProxyPassReverse directives to define it.

Editing the Location Header

If you want to be able to edit the Location header as you describe, you can do it as of Apache 2.4.7:

For edit there is both a value argument which is a regular expression, and an additional replacement string. As of version 2.4.7 the replacement string may also contain format specifiers.

The "format specifiers" mentioned in the docs include being able to use environment variables, e.g. %{VAR}e.

You might also want to consider modifying your application such that the orig_request URL parameter is relativized, thus potentially eliminating the need for Header edits with environment variables.

Relative Path Location Header

You can also try using a relative path in your Location header, which would eliminate the need to explicitly map one domain to the other. This is officially valid as of RFC 7231 (June 2014), but was was widely supported even before that. You can relativize your Location header using Apache Header edit directives (even prior to version 2.4.7, since it wouldn't require environment variable substitution). That would look something like this:

Header edit Location "(^http[s]?://)([a-zA-Z0-9\.\-]+)(:\d+)?/" "/"