anna.young,
we shouldn't give up. Things can be done to improve the editor as much as possible.
We do run into limits though and that is going to be 90% of the time browser limitations with javascript. The editor is powered with Javascript working the whole thing from an invisible iframe.
Do you mind quickly testing it on my site?
http://sleepycode.com/Forum/You should be able to post as a guest there (but won't see the topic until its approved).
I run a more recent version of SMF (from SVN) so it may be possible its fixed.