[Kiten]

Я тоже сделал:

function headerFormatter(arg) {
  let newTag = document.createElement(arg);
  if (window.getSelection) {
    let sel = window.getSelection();
    if (sel.rangeCount) {
      let range = sel.getRangeAt(0).cloneRange();
      // create an object from range for querying tags
      let rangeProxy = sel.getRangeAt(0).cloneContents();
      if (
        rangeProxy.querySelector('h1') ||
        rangeProxy.querySelector('h2') ||
        rangeProxy.querySelector('h3')
      ) {
        let tagContent = rangeProxy.querySelector(arg).innerHTML;
        // compare selection length with queried tag length
        if (range.startOffset == 1) {
          tagContent = tagContent.replace(/(<([^>]+)>)/ig, "");
          range.deleteContents();
          range.insertNode(document.createTextNode(tagContent));
          sel.removeAllRanges();
          sel.addRange(range);
          return;
        }
        else {
          let rangeToString = range.toString().replace(/(<([^>]+)>)/ig, "");
          range.deleteContents();
          range.insertNode(document.createTextNode(rangeToString));
          sel.removeAllRanges();
          sel.addRange(range);
          return;
        }
      }
      if (
        range.commonAncestorContainer.parentNode.nodeName == 'H1' ||
        range.commonAncestorContainer.parentNode.nodeName == 'H2' ||
        range.commonAncestorContainer.parentNode.nodeName == 'H3'
      ) {
        if (range.commonAncestorContainer.parentNode.innerHTML == sel.toString()) {
          let parent = range.commonAncestorContainer.parentNode;
          parent.remove();
          range.deleteContents();
          range.insertNode(document.createTextNode(parent.innerHTML));
          sel.removeAllRanges();
          sel.addRange(range);
        }
        console.log(range.endOffset);
        console.log(sel.toString().length);
        if (range.endOffset == range.commonAncestorContainer.parentNode.innerHTML.length) {
          let parent = range.commonAncestorContainer.parentNode;
          let first = document.createElement("h2");
          let second = document.createTextNode(parent.innerHTML.slice(range.startOffset, range.endOffset));
          first.appendChild(document.createTextNode(parent.innerHTML.slice(0, range.startOffset)));
          newNode = document.createElement("p");
          newNode.appendChild(document.createTextNode("New Node Inserted Here"));
          parent.remove();         
          range.insertNode(second);
          let secondRange = sel.getRangeAt(0).cloneRange();
          sel.removeAllRanges();
          sel.addRange(secondRange);
          secondRange.insertNode(first);          
        }
      }
      else {
        range.surroundContents(newTag);
        sel.removeAllRanges();
        sel.addRange(range);
      }
    }
  }
}

Но возможно, ваш способ более лаконичный, и в духе современного JavaScript.
Спасибо вам большое!