I've never liked the Quote Reply functionality found in many forums and some blogs that forces you to quote the entirety of what someone said. You end up with a blockquote above your reply that contains more than you're addressing in your reply. It's almost pointless, beyond serving as a way to say I'm replying to something you said. I think it's much more common to want to quote some piece of someone's reply; a paragraph is a more logical choice.
Brian came up with simple way to quote replies in his Metaforum project. You hover over a paragraph and a link appears that allows you to insert the paragraph into the reply textbox. Spaces are left between paragraphs so that you can insert your own replies when you're done cherry picking the pieces of the conversation you're going to address.
Now you can get similar functionality in your WordPress blog using the ClickQuote plugin. On any single post page the original post and all replies become quotable simply by hovering over each paragraph. It's perfect for discussion-heavy sites.