Current situation:

Select text, click bold. The selection is now surrounded by markdown for bold. Select the same region of text, click bold again. The selection is now "double-bolded." In most rich text editors, the effect would be to remove the bold.

Ergo, textarea.js wrapSelection could be implemented as:

var sel = this.getSelection();
if (sel.indexOf(before) == 0 && sel.lastIndexOf(after) == (sel.length - after.length)) {
    this.replaceSelection(sel.substring(before.length,sel.length - after.length));
} else {
    this.replaceSelection(before + sel + after);
}