Redcarpet (Markdown) template handler for Rails 3.1.

redcarpet.rb

# config/initializers/redcarpet.rb

class ActionView::Template
  class Redcarpet < Handler
    include Handlers::Compilable

    def compile template
      ::Redcarpet.new(template.source).to_html.inspect
    end
  end

  register_template_handler :markdown, Redcarpet
end

This mostly worked for me (Awesome!) but the generated html ended up being escaped. I used the following (copied from the markdown-rails gem) instead:

 markdown.render(template.source).inspect + '.html_safe'