formatting of text within variables

You can apply the attributes in the tool bar to the text field of variable text, but not individual letters of text because it's a dynamic field populated by the %variable%.  So you can add bold, italicize, underline, etc to the field.  Also note that special fonts, such as a handwriting font, won't render; it will default to a default system/web sans font.

This is similar to having to embed fonts in Flash to use special fonts for dynamic fields, but there's no way to embed in SL.  Not that I've found yet.