Rexx 205 characters
(This answer went through few edits as I initially just posted some code for general interest and then decided to actually post a real solution)
Here's a Rexx version to give people a taste for that less known lanugage. Rexx http://en.wikipedia.org/wiki/REXX is an interpreted language used in IBM's VM/CMS mainframe operating system and later in IBM OS/2 (and I believe there was an Amiga variant). It's a very expressive language and an amazing general purpose/"scripting" language.
Parse pull i .
d.='~'
Do until l='';Parse pull o l d.o.l;End
Do j=1 to LENGTH(o)
t=SUBSTR(o,j,1);p=i t;i=d.i.t
If i=d. then Do;Say p;Leave;End
Say p '->' i
End
Say WORD('ACCEPT REJECT',c2d(left(i,1))%32-1)
This can be run with the Regina Rexx interpreter.
Handling the incorrect transition scenario with its unique output and also testing for uppercase is a bit expensive.
Code from some older edits below for people interested in the Rexx syntax, those aren't 100% compliant with the output requirements but are functional (all code in this answer works with the samples I pasted below but the code above handles the other required corners):
Older short version:
Parse pull i .
Do until l = ""; Parse pull o l d; t.o.l = d; End
Do j=1 to LENGTH(o); t=substr(o,j,1); Say i t "->" t.i.t; i=t.i.t; End
If LEFT(i,1)='S' then Say 'ACCEPT'; else say 'REJECT'
Longer version:
Parse pull initial . /* Rexx has a powerful built in string parser, this takes the first word into initial */
Do until letter = "" /* This style of do loops is a bit unusual, note how it doesn't matter that letter isn't defined yet */
Parse pull origin letter destination /* Here we parse the inpt line into three words */
transition.origin.letter = destination /* Rexx has a very powerful notion of associative containers/dictionaries, many years pre-Python */
End
/* Now we take the last line and iterate over the transitions */
Do i = 1 to LENGTH(origin)
t = substr(origin, i, 1) /* This is the actual letter using Rexx's string functions */
Say initial t "->" transition.initial.t /* Say is like print */
initial = transition.initial.t /* Perform the transition */
End
/* check for uppercase in the current state */
if left(initial, 1) = 'S' then Say 'ACCEPT'; else say 'REJECT'
Sample in/out:
S1 s2
S1 0 s2
0
S1 0 -> s2
REJECT
S1 s2
S1 0 s2
S1 1 S1
s2 0 S1
s2 1 s2
1001010
S1 1 -> S1
S1 0 -> s2
s2 0 -> S1
S1 1 -> S1
S1 0 -> s2
s2 1 -> s2
s2 0 -> S1
ACCEPT