jQuery: Convert text URL to link as typing

I'm making progress but not quite sure how to get this working right...

I have a contenteditable div which will function similar to a textarea.

I also have a regex to recognize URLs being typed in and automatically link them. I'm having trouble however making this work "live" as the user is typing.

Here is a jsFiddle of what I have so far. One other problem I am having is the cursor jumping to the beginning of the div after a link is entered (because I am replacing the div's .html()?)

Is there creative solution to use .replace() on individual strings of text in a div without having to replace the entire content of the div?

Firstly, IE will do this for you automatically.

For other browsers, I would suggest doing the replacement after a period of user inactivity. Here's an answer of mine that illustrates how to do the replacement:

https://stackoverflow.com/a/4045531/96100

Here's a similar one with a (bad) link regex and discussion:

https://stackoverflow.com/a/4026684/96100

For saving and restoring the selection, I'd suggest using a character offset-based approach. There are shortcomings to the following code in general but for the particular case of saving and restoring a selection while changing formatting but leaving text unchanged, it's ideal. Here is an example:

https://stackoverflow.com/a/13950376/96100

Finally, here are a couple of answers with discussion and examples of how to wait for user inactivity:

https://stackoverflow.com/a/7837001/96100
https://stackoverflow.com/a/1621309/96100

Putting it all together:

var saveSelection, restoreSelection;

if (window.getSelection && document.createRange) {
    saveSelection = function(containerEl) {
        var range = window.getSelection().getRangeAt(0);
        var preSelectionRange = range.cloneRange();
        preSelectionRange.selectNodeContents(containerEl);
        preSelectionRange.setEnd(range.startContainer, range.startOffset);
        var start = preSelectionRange.toString().length;

        return {
            start: start,
            end: start + range.toString().length
        }
    };

    restoreSelection = function(containerEl, savedSel) {
        var charIndex = 0, range = document.createRange();
        range.setStart(containerEl, 0);
        range.collapse(true);
        var nodeStack = [containerEl], node, foundStart = false, stop = false;

        while (!stop && (node = nodeStack.pop())) {
            if (node.nodeType == 3) {
                var nextCharIndex = charIndex + node.length;
                if (!foundStart && savedSel.start >= charIndex && savedSel.start <= nextCharIndex) {
                    range.setStart(node, savedSel.start - charIndex);
                    foundStart = true;
                }
                if (foundStart && savedSel.end >= charIndex && savedSel.end <= nextCharIndex) {
                    range.setEnd(node, savedSel.end - charIndex);
                    stop = true;
                }
                charIndex = nextCharIndex;
            } else {
                var i = node.childNodes.length;
                while (i--) {
                    nodeStack.push(node.childNodes[i]);
                }
            }
        }

        var sel = window.getSelection();
        sel.removeAllRanges();
        sel.addRange(range);
    }
} else if (document.selection) {
    saveSelection = function(containerEl) {
        var selectedTextRange = document.selection.createRange();
        var preSelectionTextRange = document.body.createTextRange();
        preSelectionTextRange.moveToElementText(containerEl);
        preSelectionTextRange.setEndPoint("EndToStart", selectedTextRange);
        var start = preSelectionTextRange.text.length;

        return {
            start: start,
            end: start + selectedTextRange.text.length
        }
    };

    restoreSelection = function(containerEl, savedSel) {
        var textRange = document.body.createTextRange();
        textRange.moveToElementText(containerEl);
        textRange.collapse(true);
        textRange.moveEnd("character", savedSel.end);
        textRange.moveStart("character", savedSel.start);
        textRange.select();
    };
}

function createLink(matchedTextNode) {
    var el = document.createElement("a");
    el.href = matchedTextNode.data;
    el.appendChild(matchedTextNode);
    return el;
}

function shouldLinkifyContents(el) {
    return el.tagName != "A";
}

function surroundInElement(el, regex, surrounderCreateFunc, shouldSurroundFunc) {
    var child = el.lastChild;
    while (child) {
        if (child.nodeType == 1 && shouldSurroundFunc(el)) {
            surroundInElement(child, regex, createLink, shouldSurroundFunc);
        } else if (child.nodeType == 3) {
            surroundMatchingText(child, regex, surrounderCreateFunc);
        }
        child = child.previousSibling;
    }
}

function surroundMatchingText(textNode, regex, surrounderCreateFunc) {
    var parent = textNode.parentNode;
    var result, surroundingNode, matchedTextNode, matchLength, matchedText;
    while ( textNode && (result = regex.exec(textNode.data)) ) {
        matchedTextNode = textNode.splitText(result.index);
        matchedText = result[0];
        matchLength = matchedText.length;
        textNode = (matchedTextNode.length > matchLength) ?
            matchedTextNode.splitText(matchLength) : null;
        surroundingNode = surrounderCreateFunc(matchedTextNode.cloneNode(true));
        parent.insertBefore(surroundingNode, matchedTextNode);
        parent.removeChild(matchedTextNode);
    }
}

var textbox = document.getElementById("textbox");
var urlRegex = /http(s?):\/\/($|[^\s]+)/;

function updateLinks() {
    var savedSelection = saveSelection(textbox);
    surroundInElement(textbox, urlRegex, createLink, shouldLinkifyContents);
    restoreSelection(textbox, savedSelection);
}

var $textbox = $(textbox);

$(document).ready(function () {
    $textbox.focus();

    var keyTimer = null, keyDelay = 1000;

    $textbox.keyup(function() {
        if (keyTimer) {
            window.clearTimeout(keyTimer);
        }
        keyTimer = window.setTimeout(function() {
            updateLinks();
            keyTimer = null;
        }, keyDelay);
    });
});

body { font:.8rem/1.5 sans-serif;  margin:2rem; }
div {
    border:thin solid gray;
    padding:1rem;
    height:10rem;
    margin:1rem 0;
    color:black;
    font-size:1rem;
}
a { color:blue; background:lightblue; }

<script src="https://ajax.googleapis.com/ajax/libs/jquery/1.11.1/jquery.min.js"></script>
Start typing a message with a link i.e. <code>http://example.com</code>...
<div id="textbox" contenteditable></div>