Using the mouse to highlight

Answer 1

Here is a post on working with selected text. The getSelection() method can be used to get the selected text, then you should be able to replace that text with text wrapped in a tag.

Answer 2

Highlighting the selected text doesn't necessarily require you to wrap it. In fact, trying to wrap it is difficult if the range of the selection spans multiple tags (i.e. doesn't surround nicely closed tags).

Here's an answer that highlights the current selection without wrapping it: http://stackoverflow.com/questions/1622629/javascript-highlight-selected-range-button/1623974#1623974.

He uses execCommand to let the browser highlight the current document selection for you. Pretty sweet.