Readmes or massive comments? What's your preference?

[Zeriab]

It depends on the size of the script. (And of course the script itself)
For decently sized scripts I prefer to have the inline documentation intended for other scripters with a topic (or readme) which explain how to use it for the intended audience of the script.

For readme present in the downloadable script demo I'd prefer .txt or .pdf if .txt is not feasible.
I would definitely not prefer .html, especially not if there are images. It's much easier with a single file rather than the numerous files for an html version.
For the topic I utilize BBCode since it's easier since I don't have a web server.