HTMLWrapper is still used by some people but I have created two other projects that have tried to improve on the concepts within HTMLWrapper.
The first one is
http://github.com/talltyler/MiniHTML which is a very simple class that is meant to be used as a simple base that you can take apart and add things to pretty easily. The whole thing is only a couple of hundred lines and does most of what HTMLWrapper can do but rather than using HTML naming conventions everything has to use ActionScript naming conventions.
var document:HTML = new HTML( stage.stageWidth, stage.stageHeight );
document.styleSheet = 'div{ width:90%; } #idStyle{ height:90%; } .classStyle{ background:#FF0; }';
document.innerHTML = '<html><div id="idStyle" class="classStyle" alpha="0.5">Hello World!!!</div></html>';
addChild( document );
Notice the alpha="0.5" in html that would be style="opacity:0.5"
The second project is
http://github.com/talltyler/ASTRID which is an improvement on the idea that HTMLWrapper had but with much more. HTMLWrapper was created to do more than render HTML it was suppose to bridge the browser technologies together transparently. You only needed to add a few things to your html page and it would render that html in flash instead of the browsers html engine. The problem with this is that there was no ActionScript API for modifying these object or to create html renderers inside of other projects like what you are talking about. You can do some of this with MiniHTML but I wanted to create something that helped ActionScript developers develop projects that include not just HTML but all types of rendering layers and all types of data. To do this ASTRID uses a similar structure back-end frameworks like Ruby on Rails, Django, or CakePHP. I don't know how much if any you know about these things but they are implementations of Model, View, Controller. ASTRID has a very solid base of code that would be an excellent base for any project but it may not work well as a small part of a larger project.
What I would recommend is to either use MiniHTML or to extract the big HTML engine from ASTRID. ASTRID's HTML engine does use the flash.text.engine for all text except it's text input components but not the full TLF for speed and memory reasons.
Feel free to ask any other questions about these projects if you have them. It is all open-source so feel free to use what you want how you want to but I love hearing about what people have created with my code.
-Tyler