The visual-regexp package does this, and quite nicely. I'm very, very happy with it so far, and I've been using it intensively for the last six months or so.

It can be found at http://laurent.riesterer.free.fr/regexp/

--jwest

-><- -><- -><- -><- -><-
All things are Perfect
    To every last Flaw
    And bound in accord
         With Eris's Law
 - HBT; The Book of Advice, 1:7