You can do that as a one-liner (I have kept the unused “re” module import, to keep it as close to your code as possible):

  python -c 'import re, sys; print("\n".join(str(line.lower().count("foo")) for line in sys.stdin))'

or if you want to avoid building one large output string:

  python -c 'import re, sys; print(*(line.lower().count("foo") for line in sys.stdin), sep="\n")'

if memory consumption is still an issue:

  python -c 'import re, sys; set(print(line.lower().count("foo")) for line in sys.stdin)'

(This creates a useless Set object and throws it away as a side effect.)