I'm AFK for the next two weeks and unfortunately did not get to finish this. Happy for someone to pick it up while I'm away if they're interested.

Still to do:

• Padding and margin tweaks for UrlInput. Just have to get things looking like the mockups in Iterations on link interface #4572 (comment)
• Remove 'edit link' button in lieu of just displaying a text field that can be edited. Not sure if this is a good idea though, see Iterations on link interface #4572 (comment)
• Fix the failing E2E tests
• Figure out a solution to the below problem

The big problem that I got stuck on is having the selected text remain highlighted while the link UI is shown:

This functionality doesn't happen natively because we have configured TinyMCE to not use an iframe. This means that when the link URL input is focused, the selected text loses its highlight.

I had two ideas on how to move pass this limitation:

1. Insert a dummy link when the 'insert link' button is clicked. This dummy link will have a magic href value of _wp_link_placeholder. When a link with a href equal to the placeholder text is selected, the link UI will treat it as a new empty link. When the user moves their cursor, any placeholder links in the editor are removed.
   This is the approach I first took, and you can see it implemented in this PR. There are two problems with it, though:
   1. Placeholder links are not always removed, e.g. if you click outside the editor
   2. Undo state is affected by adding and removing the placeholder link
2. Fake the highlight by wrapping the selected text with a <span> that is styled to look like text selection and has a data-mce-bogus="1" attribute. The bogus attribute means that TinyMCE will not serialise the node into the HTML it outputs.
   I experimented with this approach a little but did not get very far. You can see a gist of my attempt here. The major problem I faced while taking this approach was that inserting the bogus <span> would cause TinyMCE's selection to change, which would cause the nodechange event to be triggered, which would in turn dismiss the formatting toolbar.

As my next step, I would look into adapting approach 1 to handle the selection edge case and to fix the undo state issue by using TinyMCE's ignore method. Failing that, we could, for now, abandon the highlight component of #4572 and just implement all of the other (still worthwhile) changes.

cc. @iseulde and @azaozz since they're the in-house TinyMCE experts.

Closing due to staleness. Will revisit this soon.