The KeyMagic folks are back with a bang again, making it work on jailbroken iOS devices. The Malayalam layouts are already part of the default KeyMagic installer, which means that you get the option to type in Malayalam if you just install KeyMagic.
Thant Thet has just come out with the iOS installer, and the Malayalam layout on iOS will have to tested by someone who owns a jailbroken iPhone. Volunteers, please.
Android should be the next target, I guess. Already, enough complaints have been raised that it is not possible to type Malayalam on Honeycomb. jKeyMagic, which should work on all Javascript supporting browsers might provide some solace till a proper solution is in place (Disclaimer: I have not tested jKeyMagic yet).