Maruku does allow for mathematical syntax. It does this via plugins which it calls on mathematics script, which is designated as being between single dollars, double dollars, or \[, \]. The current implementation has three plugins: blahtex, itex2mml, and ritex (never actually heard of the last one). Each has a slightly different format for it's input. The n-crowd use itex2mml which produces MathML output.

There are MathML->picture parsers which could convert MathML to pictures (which would then be cached) so that browsers unable to cope with MathML could be sent the pictures instead. That's the route that I would take by preference.

Maruku is written in ruby. I don't know if that's a problem. If it is, it is possible to get itex2mml working under PHP, either natively or by calling an external binary, in which case one could adapt PHPMarkdown to parse mathematics using itex2mml. Again, this could be converted to pictures for browsers without MathML capability.

Basically, it depends on: a) how much control you have, and b) what language you're allowed to use. Do you have any sense of what the answers to those will be?

Are you aware of Maruku (http://maruku.rubyforge.org/), which is a markdown interpreter that supports LaTeX?
This is used for math typesetting in Jacques Distler's branch of Instiki (http://golem.ph.utexas.edu/wiki/instiki/show/HomePage), and it works very well.

This looks very good if we decide to go with MathML.

I really like the option of a user preference for LaTeX->image or LaTeX->MathML, but that's probably beyond the horizon at this point.