Kannan Sundarajan has written Rich Text Editor control using ASP.NET AJAX and shared it under the MS-PL license on CodePlex. It has a very rich feature set and Kannan hopes to enhance it further in the future. Since it is a CodePlex project you can report issues and make feature requests.
Check out the live demo and see Kirti's blog for the full run down and some great screen shots.
ASP, .NET, Ajax, Text Editor
Source:? Brad Abrams' Blog