Markdown is a text-to-HTML conversion tool for web writers. Markdown allows you to write using an easy-to-read, easy-to-write plain text format, then convert it to structurally valid XHTML (or HTML).
No release package yet (setup.py, setuptools, easy_install, ez_setup? -- my head is spinning), but you can get the file directly from SVN: markdown2.py.
This is the first project for which I am really using Google Code project hosting. I'm really digging it. Nice bug tracker, nice enough wiki (all wikis should use a source control system as their backend), svn. Goodbye sourceforge.