Nice answers so far. Regular expressions alone are generally thought of as a way to match patterns, not generate output in the manner you mentioned.
Having said that, there is a way to use regex as part of the solution. @Jonathan Leffler made a good point in his comment to tster's reply: "... maybe you need a better regex library in your language."
Depending on your language of choice and the library available, it is possible to pull this off. Using C# and .NET, for example, this could be achieved via the Regex.Replace method. However, the solution is not 100% regex since it still relies on other classes and methods (StringBuilder, String.Join, and Enumerable.Repeat) as shown below:
string input = "aa67bc54c9";
string pattern = @"([a-z]+)(\d+)";
string result = Regex.Replace(input, pattern, m =>
// can be achieved using StringBuilder or String.Join/Enumerable.Repeat
// don't use both
//new StringBuilder().Insert(0, m.Groups[1].Value, Int32.Parse(m.Groups[2].Value)).ToString()
String.Join("", Enumerable.Repeat(m.Groups[1].Value, Int32.Parse(m.Groups[2].Value)).ToArray())
+ Environment.NewLine // comment out to prevent line breaks
);
Console.WriteLine(result);
A clearer solution would be to identify the matches, loop over them and insert them using the StringBuilder rather than rely on Regex.Replace. Other languages may have compact idioms to handle the string multiplication that doesn't rely on other library classes.
To answer the interview question, I would reply with, "it's possible, however the solution would not be a stand-alone 100% regex approach and would rely on other language features and/or libraries to handle the generation aspect of the question since the regex alone is helpful in matching patterns, not generating them."
And based on the other responses here you could beef up that answer further if needed.