Hmmm... This kind of editing is great for trivial examples or when inputting text through tablet/phone and it beats WYSIWYG editors hands down, but for any serious work I still prefer WYMeditor: http://www.wymeditor.org/ (don't be fooled by apparent inactivity - they just don't update the page very often).
I like the concept on the homepage, but the demo doesn't work in latest Chrome (or at least the demo page is blank) even though they say Chrome is supported.
