If you've ever used a textarea/contenteditable, read this.

Tab works okay in my latest (see profile) but I didn't use a plugin or anything like that. I just did:

$iframeEditor.keydown(function(event) { if (event.which == 9) { event.preventDefault(); iframeDoc.execCommand('insertHTML',true,'    '); }});

I agree, not that hard to solve (obviously your mileage may vary as to whether you might want to insert spaces (as shown), the number of spaces, just ignore it, do something else, whatever). You might also need to add a little bit of extra event-handling code to make it work in IE -- I don't know. Fortunately I only needed to support WebKit for this project. :-)

Do most people (non-programmers/sysadmins) use the tab key when writing text?

I'm used to the tab key moving the focus to the next field. It would annoy me if on one website it didn't, I'm sure.

This behaviour comes from Windows and MacOS where the tab key was used to move between interface elements. The first browsers were built with the same widget toolkit that the operating systems provided. From the UI perspective of the these interfaces, the tab key is doing exactly what it is supposed to do and making it do something else would break user expectations.

It annoys me too, but there is a reason for it.