Thanks Bira!!
It took me twice

, but I GOT IT!!!
The only thing is, unlike your screen shot in the opening post, in preview it does no appear to be converting the smilie code into smilies in the preview pane. It just shows the emoticon :-) for example.
No big deal really, I am very happy that it's working!!
If you think of a reason as to why the smilies don't work, that would be kewl, if not...no worries!!
Another GREAT and USEFULL hack!!!
Thanks again!!