How does Texas regulate a product warranty?

In general, consumer product warranties are regulated both at the federal level (primarily regarding warranty terms) and also at the state level (some warranties are implied under the Uniform Commercial Code, but may be disclaimed under some circumstances). You are free to sell a consumer product under a repair-or-replace warranty. However, unless you have an effective means of assuring that the consumer assents to those limitations on your liability, you may have much broader liability. You should consult with an attorney regarding your business plans and the nature of your product.