to use the plugin with a newer version of tinymce in the backend change the lines:
tinyMCE.execInstanceCommand('mce_editor_0', 'mceInsertContent', false, ' ' + tag + ' ');
tinyMCE.selectedInstance.repaint();
to:
tinyMCE.execCommand('mceInsertContent', false, ' ' + tag + ' ');
works for me with wp 2.6.3 and 2.7b1