Why can't I publish in Hindi (Kannada, Malayalam, Tamil, Telugu, ...) any more?
(Update 2011/07/20): The Transliteration feature has been returned to availability.
Blogger Known Issues for Thursday, July 07, 2011 bears the bad news to us.
We've temporarily disabled the transliteration feature until we sort out a few issues with the feature. Engineers are looking into this and hope to have the feature re-enabled shortly.If your blog requires any of these Asian character sets, you're going to have to be patient.
There's no alternate solution, or quick fix, here - though a possible workaround is suggested by Roberto: Transliteration - Post Editor Alternatives.