"Rather than" is used in parallel structures: for example with two adjectives, adverbials, nouns, infinitives or -ing forms. What is important is that the two parts compared need to be PARALLEL grammatically and logically.

e.g. I'd call her hair chestnut rather than brown.
I'd prefer to go in August rather than in July.

We use "instead of" when one person, thing or action replaces another.
e.g. I'll have tea instead of coffee, please.
Can you work with Sally instead of me?

Kasia@MasterGMAT wrote:"Rather than" is used in parallel structures: for example with two adjectives, adverbials, nouns, infinitives or -ing forms. What is important is that the two parts compared need to be PARALLEL grammatically and logically.

e.g. I'd call her hair chestnut rather than brown.
I'd prefer to go in August rather than in July.

We use "instead of" when one person, thing or action replaces another.
e.g. I'll have tea instead of coffee, please.
Can you work with Sally instead of me?

Thanks Kasia.

Instead of will always be followed by a noun/pronoun because of the preposition of. Am I right?
Instead of will also follow a parallel structure - right?

In the explanation that you gave above I see a common intersection, which is the behavior regarding nouns.

Can you work with Sally rather than me? - Is this wrong? If so, why?
Can you work with Sally rather than with me? - Is this wrong? If so, why?