If you're drawing multiple cards, each draw is performed one at a time. For example, if you're instructed to draw two cards and you replace the first draw with a dredge ability, another card with a dredge ability (including one that was milled by the first dredge ability) may be used to replace the second draw.
One card draw can't be replaced by multiple dredge abilities.
You can't attempt to use a dredge ability if you don't have enough cards in your library.
Magic: The Gathering · ™ & © Wizards of the Coast · Illus. Pete Venters
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Once you've announced that you're applying a card's dredge ability to replace a draw, players can't take any actions until you've put that card into your hand and milled cards.
Dredge can replace any card draw, not only the one during your draw step.
If an effect puts a card into your hand without specifically using the word "draw," you're not drawing a card. Dredge can't replace this event.
You may sacrifice Grave-Shell Scarab to pay for its first ability, then replace that draw using the Scarab's dredge ability. The result is that the top card of your library is put into your graveyard and Grave-Shell Scarab returns to your hand (after a brief trip to the graveyard).
