Okay, here's what I got based on that code.. the only thing it misses is a

username that is at the end of a string.
PHP Code:
<?php
function twitterify($tweet) {
//CONVERT *://.* TO LINK (EG HTTP://KEVINSMITHDESIGNS.COM)
$tweet = ereg_replace("[a-zA-Z]+://([.]?[a-zA-Z0-9_/-])*", '<a href="\\0" target="_blank">\\0</a>', $tweet);
//CONVERT *://*.* TO LINK (EG HTTP://WWW.KEVINSMITHDESIGNS.COM)
$tweet = ereg_replace("(^| )(www([.]?[a-zA-Z0-9_/-])*)", '<a href="\\1\\2" target="_blank">\\1\\2</a>', $tweet);
//LINK @USERNAME
$tweet = preg_replace('/([\.|\,|\:|\¡|\¿|\>|\{|\(]?)@{1}(\w*)([\.|\,|\:|\!|\?|\>|\}|\)]?)\s/i', '$1@<a href="http://twitter.com/$2" target="_blank">$2</a>$3 ', $tweet);
return $tweet;
}
$tweet = "@mrheadrick Hey @mozunk! Go check out http://digsby.com -- http://www.markheadrick.com I think you will like it. @robmonroe";
echo twitterify($tweet).'<br>';
// add extra space this time
$tweet .= ' ';
echo twitterify($tweet);
// get rid of space now
$tweet = rtrim($tweet);
?>
I needed to add a space to the end of the string for it to catch

username that comes at the end of the string. They way they had it coded, it was replacing what it found with itself so it didn't actually change anything LOL.