Yes, this finally solves my problem! I installed TeX Live from DVD, then looked at the screenshots on your blog page, and I am now able to mix English and Chinese. Very nice. I also find I can use the fonts you provide on your web page without problem, and thus get the regular TeX look.
If TeX Live is really required, I would think the recommendation to use XeTeX with LyX ought to be recognized a bit better -- since MikTeX is installed by default. (I suppose MikTeX is not an option if XeTeX is required?) Thanks again -- I have been looking for this for long time, and it's quite a relief to finally have a LyX that handles both Western and Chinese so well.
