Late answer, but hopefully worthwhile: The Poor Man’s T-SQL Formatter is an open-source (free) T-SQL formatter with complete T-SQL batch/script support (any DDL, any DML), SSMS Plugin, command-line bulk formatter, and other options.
It’s available for immediate/online use at http://poorsql.com, and just today graduated to “version 1.0” (it was in beta version for a few months), having just acquired support for MERGE statements, OUTPUT clauses, and other finicky stuff.
The SSMS Add-in allows you to set your own hotkey (default is Ctrl–K, Ctrl–F, to match Visual Studio), and formats the entire script or just the code you have selected/highlighted, if any. Output formatting is customizable.
In SSMS 2008 it combines nicely with the built-in intelli-sense, effectively providing more-or-less the same base functionality as Red Gate’s SQL Prompt (SQL Prompt does, of course, have extra stuff, like snippets, quick object scripting, etc).
Feedback/feature requests are more than welcome, please give it a whirl if you get the chance!
Disclosure: This is probably obvious already but I wrote this library/tool/site, so this answer is also shameless self-promotion 🙂