This is the Textile 2 plugin that should be shipping with Wordpress. If the Wordpress developers want more people to seriously consider moving to Wordpress from MovableType they NEED to ship with a MT-Texile compatible text filter plugin.
When I brought over my posts from MT a majority of them were screwed up beyond all comprehension. This plugin is a god-send! All my posts now look identical to the way I created them in MT with MT-Textile 2. :D