I of course believe that word analysis is something that we definitely want. But I don't think it's something we can do programmatically at the moment, and even if we do it manually, I completely agree with Dan that standoff markup (i.e., have the unanalyzed text in one place, and the analyzed text linked to it in another place) is the only way to avoid really nasty problems of OHCO violations, vowel sandhi, and so on. In principle one could always find a solution (the BHELA conventions sometimes used on GRETIL are a nice way of specifying how vowel sandhi is to be "undone") but in general I don't think we should worry too much about word analysis at the stage of applying structural markup to texts. Here is my "alternate encoding" (using TEI) for the above verse, just to show that I have not entirely thrown word analysis to the wind:
<s>
<w lemma="ādisvarapada">
<w lemma="ādi" ana="#ibc">ādi</w>
<w lemma="svara" ana="#ibc">svara</w>
<w lemma="pada">padaṁ</w>
</w>
<w lemma="anta" ana="#sing #loc">antadoḷ</w>
<w lemma="āgu" ana="#p #adjp">āda</w>
<w lemma="eḍe" ana="#sing #loc">eḍeyoḷ</w>
<w lemma="āgu" ana="#habit">akkuṁ</w>
<w lemma="eraḍaneya" ana="#adn">eraḍaneya</w>
<w lemma="vibhaktyādānapada">
<w lemma="vibhakti" ana="#ibc">vibhakti</w>
<w lemma="ādāna" ana="#ibc">ādāna</w>
<w lemma="pada" ana="#sing #nom">padaṁ</w>
</w>
<w lemma="dīrgha" ana="#sing #nom">dīrghaṁ</w>
<w lemma="pādānta">
<w lemma="pāda" ana="#ibc">pāda</w>
<w lemma="anta" ana="#sing #loc">antadoḷ</w>
</w>
<w lemma="uḻi" ana="#p #adjp">uḻida</w>
<w lemma="tāṇa" ana="#sing #loc">tāṇadoḷ</w>
<w lemma="svacchanda" ana="#sing #nom">svacchandaṁ</w>
</s>