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I have generally been using pdfLaTeX to typeset my documents. I recently heard about XeTeX which supposedly is the same thing, except has better support for things like unicode and fonts.

Is there a tool which operates as XeTeX does but which allows a direct PDF translation, rather than going through intermediate stages?

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Yes, and it's called LuaTeX. See also this question on se.

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Can you tell Lualatex that a document uses Unicode as its character encoding, without using inputenc? –  Charles Stewart Sep 24 '10 at 7:08
Yes, you should not use inputenc (or anything else) if you're using UTF8 encoded input. For fontencoding, use EU2 fontenc or the fontspec package. –  topskip Sep 24 '10 at 7:18
That was really not subtle, Patrick ;-) –  Arthur Reutenauer Sep 24 '10 at 16:58
@Charles: LuaTeX expects UTF-8 input, full stop. Well, that's not the whole story, as Patrick says, but that's how LuaTeX is supposed to ve used. –  Arthur Reutenauer Sep 24 '10 at 17:00
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XeLaTeX outputs a PDF by default. Yes, it does use xdvipdfmx along the way, but why should that bother you? No DVI file is left behind.

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One problem is that routing the typesetting through xdvipdfmx precludes the use of pdfTeX-like enhancements such as those provided by the microtype package. microtype is currently adding support for LuaTeX. –  Sharpie Sep 23 '10 at 18:49
It's unclear to me that the intermediate level is the problem. Anyway, microtype is also adding (partial) support for XeTeX... See my question here. tex.stackexchange.com/questions/2986/… –  frabjous Sep 23 '10 at 19:45
microtype has added LuaTeX support long ago, and a preliminary version that works with XeTeX is available from xetex.tk –  Philipp Sep 23 '10 at 19:54
I stand corrected. Sorry for the noise. –  Sharpie Sep 23 '10 at 20:51
What you say is true for the TeX engine, but XeTeX uses an extended DVI format (en.wikipedia.org/wiki/XeTeX), so I expect them to have added PNG support to that format. –  Blaisorblade Sep 30 '10 at 16:36
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