Daniel-
The 2) feature is non-intuitive and confusing. I found it very frustrating to select text and then do the *natural* thing by hitting the big fat bold B, expecting the text to either become bolded or for markup needed to turn the text bold
That's not possible. Your browser does not support it. It neither supports changing the selection *nor* retrieving it. So the best we can do in these browsers is give the user a kind of help menu to get sample text for easy copy and pasting (which is particularly useful for stuff like the signature tildes, which some users cannot type). The inputbox says clearly "Click a button to get an example text". If you can think of a better text to put in there, let me know.
However, the cursor should not shift to the input field above the textarea. It should stay inside the textarea. Please make sure your cache is empty before testing.
Regards,
Erik