To preprocess the CSS you call renderCSS($cssText)

Without preprocessing:
<code lang="CSS">
#navbar {
  border: 1px solid black;
}

#navbar h2 {
  background-color: black;
  color: white;
}

#navbar li {
  float: left;
  width: 100px;
}
</code>

With preprocessing (this may not syntax highlight correctly):
<code lang="CSS">
#navbar {
  border: 1px solid black;
  
  //Applies to h2s within the navbar
  h2 {
    background-color: black;
    color: white;
  }

  li {
    float: left;
    width: 100px;
  }
}
</code>

And here's the php Code:
<code lang="PHP">
/**
 * Renders a snippet of CSS
 *
 * @param string $cssText
 * @return string
 */
function renderCSS($cssText) {
	$data = preg_replace('/(\/\/.*\n)/',"",$cssText); // remove single line comments, like this, from // to \\n
	$data = preg_replace('/(\t|\r|\n)/',"",$data);  // remove new lines \\n, tabs and \\r
	$data = preg_replace('/(\/\*[^*]*\*\/)/','',$data);  // remove multi-line comments /* */
	$data = preg_replace('/(\/\*[^\/]*\*\/)/','',$data);  // remove multi-line comments /* */
	$data = preg_replace('/(\s+)/', ' ',$data); // replace multi spaces with singles
	$data = fixNesting($data);
	$data = preg_replace('/[^}{]+{\s?}/', '', $data);  //Remove empty rules
	$data = preg_replace('/\s*{\s*/', "{", $data);
	$data = preg_replace('/\s*}\s*/', "}", $data);
	$data = preg_replace('/}/', "}\n", $data);

	return $data;
}

// Helper callback function for fixNesting (below)
function fixNesting_buildSelector($outer, $inner) {
	$outerPieces = split(",", $outer);
	if (trim($inner) == "IEHACK") {
		foreach ($outerPieces as $o) {
			$resultPieces[] = "* html " . $o;
		}
	} else {
		$innerPieces = split(",", $inner);
		$resultPieces = array();
		foreach ($outerPieces as $o) {
			foreach ($innerPieces as $i) {
				$resultPieces[] = $o . " " . $i;
			}
		}
	}
	return join(",", $resultPieces);
}


// Helper callback function for fixNesting (below)
function fixNesting_selector($selectors, $depth) {
	$newSelector = $selectors[0];

	for($j = 1;$j<$depth; $j++) {
		$newSelector = fixNesting_buildSelector($newSelector, $selectors[$j]);
	}

	return  $newSelector;
}

function fixNesting($cssText) {
	$result = array();
	$pieces = split("{", $cssText);

	$selectorStackIndex = 0;
	$selectorStack = array();

	$currentPieceIndex = 0;

	for ($i = 0; $i<count($pieces); $i++) {
		$piece = $pieces[$i];
		while (($closeBracketPos = strpos($piece, "}")) !== false) {
			if ($closeBracketPos > 0) {
				$result[] = substr($piece, 0, $closeBracketPos);
			}
			$result[] = "}";

			$selectorStackIndex--;

			if ($selectorStackIndex > 0 ) {
				$result[] = fixNesting_selector($selectorStack, $selectorStackIndex);
				$result[] = "{";

			}
			$piece = substr($piece, $closeBracketPos+1);
		}

		if (trim($piece) == '') {
			continue;
		}

		// Inner Rule
		$endOfLastProperty = strrpos($piece, ";");
		if ($endOfLastProperty !== false) {
			$result[] = substr($piece, 0, $endOfLastProperty+1);
			$piece = substr($piece, $endOfLastProperty+1);
		}

		if ($selectorStackIndex > 0) {
			$result[] = "}";
		}

		// Whole piece is the selector
		$selector = $piece;

		$selectorStack[$selectorStackIndex++] = $selector;
		$result[] = fixNesting_selector($selectorStack, $selectorStackIndex);
		$result[] = '{';
	}
	$result = join($result);

	return $result;
}
</code>