I've been playing around with converting from transliteration schemes for Tamil and other South-East Asian languages to UTF-8 as a pet project for over a year now and Flash Player 9 has really come to the rescue.
Just spent some time cleaning up old code I had lying around based on the Pongku Tamil tool by Suratha Yazhvanan. It relies heavily on the use of regular expressions to do find and replace (in this case a sequence of 633 patterns) but the player seems to have no problem keeping up.
For now this little tool supports converting romanized Tamil to unicode characters and vice versa. If there's any interest from the community I'll add Bamini and TSCII support and 'componentize' it for Flex 2.
I would also like to do a version for devanagari with full support for the ITRANS scheme but it seems slightly more tricky and needs some more research on my part. Feel free to get in touch with your ideas!