It is not so obvious from David's post: the test site for this TeX extension to the HTML editor is at http://mantis.york.ac.uk/~david/moodle/index.php. Login as user test with password testtest.
When you post to the forum there you will see three new toolbar buttons on the editor, each one so far marked by !. If you select a TeX expression and press the first button you will see a preview of the expression, if you press the second button you will see a preview of the whole editor contents and if you press the third button you get a TeX input window with live preview the contents of which get reinserted into the editor.
The preview is done with jsMath. We are already using jsMath in our Moodle at the Maths Department here in York. I am teaching a course to first year students where they learn to use TeX. I am planning to put David's TeX extensions of the editor into production service here at the start of next week.