Writing your own wrapper on contenteditable is like rewriting jQuery. Yes it's a messy complicated problem. That's why you don't do it yourself.
Something like TinyMCE is incredibly configurable and has had years to work around the browser quirks in contenteditable. Use it wherever possible.
On a side note I recently exchanged some emails between the lead dev on TinyMCE and the person working on the Webkit implementation of contenteditable. I had very little luck persuading them to communicate. The fault was mainly on the webkit end of things. I find it astonishing there isn't better communication between people at this level. The number of people using TinyMCE via Wordpress must be in the millions. You'd think people working on Webkit would be seeking them out for advice on implementation bugs.
Something like TinyMCE is incredibly configurable and has had years to work around the browser quirks in contenteditable. Use it wherever possible.
On a side note I recently exchanged some emails between the lead dev on TinyMCE and the person working on the Webkit implementation of contenteditable. I had very little luck persuading them to communicate. The fault was mainly on the webkit end of things. I find it astonishing there isn't better communication between people at this level. The number of people using TinyMCE via Wordpress must be in the millions. You'd think people working on Webkit would be seeking them out for advice on implementation bugs.