If you have these problems too, you can now use the LJ-ifier to clean up your logs before pasting. It allows you to replace two screen names with LJ usernames (which will be made into tags) or just plain names. It will also attempt to edit out timestamps, but you can turn that off if the joke depends on it.
Suggestions welcome, as long as they're not "let us replace more than two names," because that's an obvious step. In particular, let me know if the timestamp killer doesn't work on your log format, and I'll see what I can do about improving the regular expression.
Edit: Made some changes in response to feedback. There are two more formatting options--coloring screen names (using the standard red and blue for now, but that could be changed) and bolding them. Also, I adapted the timestamp catcher to pick up Google chat's format, and fixed the bug whereby a name like "me" would get replaced in the middle of words like "time." I'm about to add a field on the page to let people request features more directly.