Here's the methods, from lo-tech & least integrated to hi-tech & most integrated....
- Use the tag-making bookmarklet written by Ted Ernst. This is the method I started out with & the method I wrote a how-to for. This is ideal with blogger blogthis. After installing the bookmarklet, you write a post, use the bookmarklet to generate tags, & then paste the line of tag code into your post before you publish. More on my experience here.
- Use pace_tua's upgraded bookmarklet, which generates the same code, but pastes it automatically into the blogger "create post" link field and therefore includes it in your post without cutting & pasting. You'll need to change your blog settings to show the link field. More on my experience here.
- If you browse with Firefox. Install the greasemonkey extension, and then run a greasemonkey script that will modify the blogger create / edit post page to include a tag creator in the form. Then just type your tags as you type your post!! This method can be bookmarklet-free, because the script adds a bookmark to del.icio.us link to the blogger publish notification window. See my revised how-to.
Update 8/26: A fourth way to add the tags especially for blogthis! users: There's an extension bookmarklet out there for blogger blogthis! that makes it possible to add tags to posts that you write that way. The script was written to generate technorati tags by Ken at Ken's Meme Deflector. I've edited it to output technorati & del.icio.us combo tags. If you want to post with blogthis but tag for categories too, this script can help.
Update 11/16: See the new "Del.icio.us Tagroll" feature as a way to export your categories into your sidebar automatically, without having to hand code a menu.