I discovered this nice tool from google which extends their transliteration services to other websites as well.
It is really exciting for multilingual people like me ... and immediately I tried it on Facebook and it worked quite well!!
Where this falls short at the moment is on CMS based website editing ... or even Blogger itself. Here I could type only title in Hindi and on the main content this tool is not operational.
I hope google's Indic Transliteration team can solve this and then atleast half a billion people would have new reason to get on to the net !!
Link for the tool : http://t13n.googlecode.com/svn/trunk/blet/docs/help_hi.html
This works for other indian languages as well