For Markdown -> HTML, there is Showdown
StackOverflow itself uses Markdown language for questions and answers ; did you try to take a look at how it works ?
Well, it seems it is using PageDown which is available under the MIT License
The question Is there any good Markdown Javascript library or control? and its answers might help, too 🙂
A full editor is, of course, not exactly what you asked for ; but they must use some kind of function to transform the Markdown code to HTML ; and, depending on the license of these editors, you might be able to re-use that function…
Actually, if you take a close look at Showdown, in its code source (file showdown.js), you’ll find this portion of comment :
//
// Showdown usage:
//
// var text = "Markdown *rocks*.";
//
// var converter = new Showdown.converter();
// var html = converter.makeHtml(text);
//
// alert(html);
//
// Note: move the sample code to the bottom of this
// file before uncommenting it.
//
It’s not jQuery syntax, but should be quite easy to integrate in your application 😉
About Textile, it seems to be a bit harder to find anything useful 🙁
In the other side, HTML -> Markdown, I guess things might be a bit harder…
What I would do is store both Markdown and HTML in my application data store (database ? ), and use one for editing, and the other for rendering… Would take more space, but it seems less risky than “decrypting” HTML…