I've been working on our editor a bit tonight, and there are some changes to its functionality. Now, when you click the buttons such as Bold, Italic, etc., the editor automatically gets focus and highlights the dummy text. Therefore, you can immediately start typing to replace it.
Also, I went ahead and took Ancient Dragon's suggestion to highlight to quote something. If you want to quote text in a post, click and drag your mouse to select the text (as if you were going to copy/paste it) and then simply click in the textbox where you want to insert it. It will automatically insert it and skip a blank line, ready for you to start entering text replying to the quote.