It's not clear to me how such a feature would work robustly. Consider the following example:
Code:
<div>
<div>
<span class="heading">cursor</span>
</div>
</div>
And you select the word cursor and trigger the h1 button. Which tag should be changed to h1? The first div, the second div or the span?
The best that can be done is to change the immediately surrounding tag, which means if you want to change the first div you need to put your cursor between the first and second divs, for the second div, between the second div and the span and so on.