[quietbritishjim]

In case you haven't already heard of it, LyX [1] does exactly that and it's phenominal. As an added bonus, when you move your cursor out of the equation it goes from a graphical almost-right visualisation to a proper LaTeX-generated absolutely-right preview, and manages other related LaTeX things like heading levels with a live clickable outline.

The big disadvantage to LyX is that it's not LaTeX editor but a LaTeX generator. So if you want to write your next article or dissertation and can commit to it then it's great, but if you want to import work so far or collaborate with someone not using LyX then it doesn't really work (it has an import function but it's almost unusable).

[1] http://www.lyx.org/

[iguy]

I've actually had good luck round-tripping lyx-latex-lyx repeatedly to collaborate with lyx-phobic co-authors. (As long as they don't mind equations they typed getting auto-formatted, etc.)