MiniQuiz : Renesting Nodes (OWLScratch)

return unless bored? #MiniQuiz = do my 'work' for me.

I'm writing a library (OWLScratch) for converting wiki markup into  
HTML. (The OWL part of the name is because it's derived from the  
markup used by OpenWiki, hence "OpenWiki Language"; the Scratch is  
because it's my own half-implemented flavor.)

It's not nearly ready yet, but the core concepts are working. So far,  
it tokenizes the document into a series of hierarchically-nested  
nodes. If I wanted XML, I could make up my own schema and be done.  
But I want HTML.

In OWLScratch, the following represents a nested list:

   * List item 1
   * List item 2
     * List item 2.1
     * List item 2.2
   * List item 3
     * List item 3.1
       * List item 3.1.1

Right now, that tokenizes into one node per line:
<bullet level="1">List item 1</bullet>
<bullet level="1">List item 2</bullet>
<bullet level="2">List item 2.1</bullet>
<bullet level="2">List item 2.2</bullet>
<bullet level="1">List item 3</bullet>
<bullet level="2">List item 3.1</bullet>
<bullet level="3">List item 3.1.1</bullet>

The challenge is that I need to be able to spin through the list and  
(should be possible in one pass) properly nest those as the HTML  
requires:

<ul>  <-- new node!
   <li>List item 1</li>
   <li>List item 2
     <ul> <-- new node, child of list item 2!
       <li>List item 2.1</li>
       <li>List item 2.2</li>
     </ul> <-- closed because the next item is a lower level
   <li>List item 3
     <ul> <-- holy crap, it happened again!
       <li>List item 3.1
         <ul> <-- when will the madness end?
           <li>List item 3.2</li>
         </ul>
       </li>
     </ul>
   </li>
</ul>

I know this should be not-hard, but I just played a full game of  
Ultimate Frisbee, and I thought this might appeal to someone else.  
The full library (so far, v0.0.1 or so) is attached, but I can (and  
probably will have to) extend the Tag class to support DOM-like  
properties such as previous_sibling and next_sibling. And make  
reparenting a node properly remove it from the previous parent's  
@child_nodes collection.

I'll speak more about OWLScratch in a few days, when I hope to have  
it ready for a really preliminary release.

Oh, for extra credit - think about nested list types, as seen here:  
http://openwiki.com/ow.asp?HelpOnFormatting#h9
(My lists do not (currently) allow content of a single item to be  
manually wrapped onto multiple lines.)