I plan to break some of the better formats code into an api hook function code for use by any module that would like to extend the format system.

This is my proposal for what should be put into D7 and is explained more on g.d.o: http://groups.drupal.org/node/18222

Comments

What's the progress on this?

I'd love to see the 'permissions' setup properly (as settings) as per #368187: Move input format "permissions" into "Display settings", but that relies on #378664: Break up features into smaller modules, which in turn relies on this issue...