@index.document("1").add({:text => "London England"})

$("#query").data("autocomplete")._renderItem = function(ul, item) { .. }

get '/index/' do
    term = params['term']

    #Query IndexTank index using the IndexTank::Client

    #Parse index search results and return an array of the suggestions as JSON
end

<form id="search_form" action="/" method="POST">
    <input id="search_field" name="search_field" type="text">
</form>

$(document).ready(function(){
    $("#search_field").autocomplete({
      source: function(request, response) {
        $.ajax({
          url: "/index/",
          dataType: 'json',
          data: { term: request.term },
          success: function(data) {
            response($.map(data, function(item) {
              return {label: __highlight(item, request.term),
                value: item};
            }));
          }
        });
      },
      minLength: 2
    })
    .data( "autocomplete" )._renderItem = function( ul, item ) {
      // only change here was to replace .text() with .html()
      return $( "<li></li>" )
        .data( "item.autocomplete", item )
        .append( $( "<a></a>" ).html(item.label) )
        .appendTo( ul );
    };
  });

  function __highlight(s, t) {
    var matcher = new RegExp("("+$.ui.autocomplete.escapeRegex(t)+")", "ig" );
    return s.replace(matcher, "<strong>$1</strong>");
  }