You need to make a variable which is the selection, and then set the variable to be itself and the tags. This might help:

theSelection = document.selection.createRange().text;
document.selection.createRange().text = "*" + theSelection + "*";

Obviously you replace the stars with the tag you want. Don't know if it works in anything other than IE, though, and I haven't a clue where it would go. Have fun with it.