Here's how I write my devanaagarii documents.
I've tried a lot of different software - Itranslator, LaTeX (on Linux), and a few more Windows specific ones. Itranslator was very good but it runs only on Windows and I do not use Windows. And moreover, I don't really like the way the web-pages it creates look. Then I found something that just works for me - Yudit.
Yudit uses unicode - fantastic. And you can write in so many different scripts from all over the world! And you can switch between scripts with the push of a single key. ere's how you can do it too ...
It's quite impressive. And it is available for Windows too.
Well, that's not the whole story. Now you have to actually create the type of document you want. Yudit can itself create text and ps files. For html of odf formats, you'll have to paste the contents into the respective editors. I write the entire document with the html code in yudit, then copy/paste it in my Xemacs editor and save it as a HTML file. And voila! it is done!
Now, let's assume you have a good browser. By good I mean standards-compatible. In my experience, a devanaagarii document with CSS appears best in Konqueror. The Firefox rendering is quite good if it is native to your distro. If not, the glyphs/ligatures etc. are messed up. In Internet Explorer, the rendering of the font was good, but the CSS and the font itself was bad. (So my page did not come out well in IE.) I even checked it on the latest IE7! (But not a fan of IE at all since it is not standards compliant and other things on my homepage do not come out right.)
Well, Opera 9.0.1 did not render the fonts well either (though it is a wonderful - and standards compliant - browser). But then it is not native to any Linux distro that I am aware of. So the rendering for devanaagarii unicode fonts is not good. Enabling pango on gecko based browsers seems to be a solution but has not worked for me. The rendering was not good on Safari too. (Tested on Mac OS X Panther.)
You can always check the BBC Hindi webpage to see how your brower fares. A good resource page is devanaagarii.net.
This information and procedure is all based purely on my experience and (non-)expertise. Please write to me if you find things different than noted here.