I was looking for something similar and came across this question. Then I was excited to find Mathquill, via the Wikipedia page on formula editors.
I've used a bunch of different formula editors, from MS Equation Editor to Google Docs' to LyX, and this is probably the most usable/fluid of all of them for simply banging out formulas. And it's web-based and GPL. This thing is much nicer than Google Docs' formula editor, at least.
Still leaves plenty of things to be desired, e.g. so far I've found: bolding, entering things like bra-kets, \hat, undo/redo history, mouse drag selection, etc. But I'm impressed by what's already in there. Anyway, it's just a few Javascript files, and on github.