Joho links to the Google Auto Linker, a tool that searches through a piece of text and finds the longest matching result from chained words. It’s not clear whether it stops for stop-punctuation (period, questions mark), but it appears to in the example.
I had been interested in doing something like this after watching a demonstration of some of the Xanadu tools for “deep linking.” Ted Nelson was busy attacking how Google-centric the web had become, and yet, I thought, the tool he was demonstrating at the time, which hyperlinked chunks of text that had been borrowed from earlier works, could be implemented precisely as it is here by Lenssen. In fact, any other way, which would put the responsibility of finding the links on the user, was silly.
Now, if only you could link it to everything on your own computer. But then, that’s what Google Desktop is/will be for, isn’t it?