I like this a lot, and for quick notes it's easier than Notable. I like the implementation as a bookmarklet, but here are two big problems:
1) Starting MarkUp clears any info you've entered into a form on the page
2) There is no easy way to exit/cancel (how about trapping ESC or adding a little X?)
Obviously you've already added it to your list, but just for feedback, this is the biggest thing I'm missing right now too (no cancel or close). The history is amazing and I'm not sure if you've got a limit on it but I did undo roughly 30 times easily. You may want to also consider an undo button for people who don't think to try Ctrl-Z or just some info on possible commands on the info button. Do you support any other keyboard shortcuts (switching tools, size up or down etc?)
1) Starting MarkUp clears any info you've entered into a form on the page 2) There is no easy way to exit/cancel (how about trapping ESC or adding a little X?)