Cibu's Varamozhi - transliteration based editor has been released.
It is licensed under GPL, supports 6 fonts. For more info read :
http://groups.yahoo.com/group/malayalamlinux/message/84
and visit http://varamozhi.sourceforge.net
Kerala Bureau of Industrial Promotion (K-BIP) has entered into an agreement with Free Software Foundation of India (FSF) for development of scalable Malayalam font. For the first time, Unicode-based desktop with Malayalam support including its tool kits and localized applications will also be created as part of this project. The agreement was signed in the presence of Kerala Industries Minister Mr. P. K. Kunhalikutty, by Mr. Ajay Kumar, Secretary (Industries) and Dr. E. Krishnan, Director, Free Software Foundation
for more info visit : http://www.keralaindustry.org/mal-font-mou.htm
and the web : http://keltron.co.in/malayalam