A new module for Drupal 7 has just come out of our pantry, and is now live on drupal.org.
Formatted Titles allows to change the type of the title field in an entity’s edit form from simple text to formatted text. When the entity is loaded, its title is then replaced with its formatted version.
In a view, Formatted Title tries to replace all instances of an entity’s title, even when the entity is being brought in through a relationship.
After enabling the module, go to admin/config/content/format-title, where you can enable formatted titles on a per-entity, per-bundle basis. You can also choose to restrict the HTML output of the module even further.