Below is an example of using Scriptaculous for tagging content. The how-to guide on how to do this can be seen in the articles section under JavaScript.
Click "Add a tag" and then beginning typing to add a tag. When you have done typing click anywhere on the page or press enter to update the tags you have added. Another possibility to improve this would be to start a new tag when the user has pressed space unless preceeded by a single quotation mark in the current tag.