Below is a function to set the selection to a pair of character offsets within a particular element. This is naive implementation: it does not take into account any text that may be made invisible (either by CSS or by being inside a <script> or <style> element, for example) and may have browser discrepancies (IE versus everything else) with line breaks, and takes no account of collapsed whitespace (such as 2 or more consecutive space characters collapsing to one visible space on the page). However, it does work for your example in all major browsers.

For the other part, the highlighting, I'd suggest using document.execCommand() for that. You can use my function below to set the selection and then call document.execCommand(). You'll need to make the document temporarily editable in non-IE browsers for the command to work. See my answer here for code: getSelection & surroundContents across multiple tags

Here's a jsFiddle example showing the whole thing, working in all major browsers: http://jsfiddle.net/8mdX4/1211/

And the selection setting code:

function getTextNodesIn(node) {

    var textNodes = [];

    if (node.nodeType == 3) {

        textNodes.push(node);

    } else {

        var children = node.childNodes;

        for (var i = 0, len = children.length; i < len; ++i) {

            textNodes.push.apply(textNodes, getTextNodesIn(children[i]));

        }

    }

    return textNodes;

}



function setSelectionRange(el, start, end) {

    if (document.createRange && window.getSelection) {

        var range = document.createRange();

        range.selectNodeContents(el);

        var textNodes = getTextNodesIn(el);

        var foundStart = false;

        var charCount = 0, endCharCount;



        for (var i = 0, textNode; textNode = textNodes[i++]; ) {

            endCharCount = charCount + textNode.length;

            if (!foundStart && start >= charCount

                    && (start < endCharCount ||

                    (start == endCharCount && i <= textNodes.length))) {

                range.setStart(textNode, start - charCount);

                foundStart = true;

            }

            if (foundStart && end <= endCharCount) {

                range.setEnd(textNode, end - charCount);

                break;

            }

            charCount = endCharCount;

        }



        var sel = window.getSelection();

        sel.removeAllRanges();

        sel.addRange(range);

    } else if (document.selection && document.body.createTextRange) {

        var textRange = document.body.createTextRange();

        textRange.moveToElementText(el);

        textRange.collapse(true);

        textRange.moveEnd(character, end);

        textRange.moveStart(character, start);

        textRange.select();

    }

}