I'm currently writing an edit-in-place script for MooTools and I'm a little stumped as to how I can make it degrade gracefully without JavaScript while still having some functionality. I would like to use progressive enhancement in some way. I'm not looking for code, but more a concept as to how one would approach the situation. If you have any ideas or know of any edit-in-place scripts that degrade gracefully, please share.
It sounds like you might be approaching this from the wrong direction. Rather than creating the edit-in-place and getting it degrade nicely (the Graceful Degradation angle), you should really be creating a non-Javascript version for editing and then adding the edit-in-place using Javascript after page load, reffered to as Progressive Enhancement.
There are two options for this. Create the display as a form with a submit button that works without Javascript, then using Javascript replace the inputs with some kind of label that performs the edit-in-place. You should be able to use a combination of labels and id attributes to pick out the correct properties for your edit-in-place implementation to work. The other option if you don't want a form to display by default is to display the values with an button/link for turning it into a form using server-side processing, then adding the edit-in-palce to that.