Now that I have played around extensively with this whole dropcap issue in here I have decided on the best approach. After a quick note in the s9y forums and a little more study, I have decided to implement the actual dropcap look and feel in the style templates (as per the documentation) and hook this in with a modification to the BBCode Markup Plugin.
T his text effect was located at Mandarin Design, a website that has allot on design and style, particularly using CSS. I created this manually by applying a span around the first letter to force it to be big and beautiful. Also a font change to serif and an opacity factor of 75% so it isn't so black.