Compiling Varamozhi on Mac
If one downloads the source and compiles it, the command line tools of varamozhi work on OS X 10.3. To compile one needs to have the Xcode package installed. Xcode can be downloaded for free from the apple developer site (http://www.apple.com/developer/), butyou'll need to register (for free). More importantly, you should have the bandwidth to download the entire package (a few 100 MBs if I recall correctly).
I might still have the binaries that I made lying around. I can send them to you if you are interested.
Btw, another issue with Malayalam on Mac is that there's no unicode font available. Though one can use Anjali, it doesn't render properly because the advanced features in the font (for proper rendering) need to be encoded differently in a mac font.
Finally, if you want a keyboard (instead of using varamozhi) to generate unicode directly, you can try http://www.cs.princeton.edu/~mp/malayalam/keyboard But it's a little buggy, I believe.
Manoj ( mp അറ്റ് princeton.edu )