I have discovered an awesome telugu editor for Linux platform called Yudit. Yudit supports several Indian Languages as well. Things are much better now. Surprisingly, it took only a few minutes to download, compile, install Yudit and generate documents in Telugu. Here’s a sample:Â 
You could save this to utf-16 in Yudit and insert in your HTML files as well. [utf-16: యతà±? à°à°¾à°µà°‚ , తతà±? à°à°µà°¤à±€ !!]
Avinash’s ITRANS Tool is also cool, but no offline (free) editor is available. Kudos to all the contributors. Credits: Gaspar Sinai (Yudit), Ananda Kishore,et.al (RTS for Telugu), Chandrakanth Chereddi (Yudit for Telugu), Desikachary,K (Pothana2000.ttf)