The underline button does not work properly in webkit browsers such as Safari 5 and Chrome 5.

This same problem occurs in standalone TinyMCE 3.2.7 so that's probably the reason. This issue has been fixed in TinyMCE 3.3.8 (the newest at the time of writing).

Steps to reproduce

1. Type some text.
2. Click the underline button. It does not highlight.
3. Type some more text, it should be underlined.
4. Hit enter. This will (incidentally) make the underline button highlight.

Of course, the underline button should be highlighted already at step 2.