Back in August, there was a discussion on the OpenType developer list (subject: ' and in Indic scripts?') regarding Indic shaping engines limiting layout input and context to individual clusters, preventing contextual interaction across syllable boundaries. Although some concerns were raised about possible impact on existing fonts if this behaviour were to change, I believe this is a minor an unproven concern vs. the clear problems raised for Indic typography by this limitation.
I have prepared a discussion paper -- i.e. a paper to prompt discussion -- illustrating some of the problems that occur in Indian typography that cannot be resolved without cross-cluster layout interaction. This paper is available here:
http://www.tiro.com/John/Problems_for_Indic_Typography.pdf
Although I will likely draw attention to this paper in other forums, it would be helpful if discussion were conducted on the OpenType developer list (on the grounds that most of the relevant software implementors will see it there). Subscription information here: