Hi Jeffro. Thanks for testing it out and giving feedback! I brought it up in the #core-editor meeting yesterday (https://make.wordpress.org/core/2015/11/03/weekly-editor-chat-resumed/) and opened a core ticket (https://core.trac.wordpress.org/ticket/34584).

Ella had an interesting suggest for perhaps using placeholders instead of a pop-up (similar to what Medium does for some content). You can read back through the conversation if interested in the #core-editor log.

My plugin doesn't output any styles, which is the reason blockquote citations will appear differently in various themes (including slightly wonky in yours). Theme authors would need to style blockquote markup and account for citations- but at least we would have standardized markup to base that on.