What is the best place to calculate differences between two versions of a text (and add corresponding "removed" and "added" css classes)?
Should this be done at the server or is it better to have client-side JS handle this?
Unless you do something crazy, it shouldn't be possible to determine the revisions with just JS if you're looking at simple DOM content.
You'll want to use a combination of server-side code and JS to handle the revision checking to create a system like this, but classes like removed and added should probably be created server-side.