Converting and formatting HTML in an interface

You cannot use Rich Text Display Field to show HTML-formatted text with styling. The solution is to use a read-only Styled Text Editor component. This way preserve the HTML formatting from your Styled Text Editor Field.

See below working example

a!localVariables(
  local!htmlText:"<b>Bold Text</b><br/><em>Italic Text</em><br/><u>Underlined</u><ul><li>Bullet 1</li><li>Bullet 2</li></ul>",

  a!sectionLayout(
    label: "HTML Text Display Comparison",
    contents: {
      a!textField(
        label: "Raw HTML (stored value)",
        value: local!htmlText,
        readOnly: true
      ),

      a!textField(
        label: "Using stripHtml() - loses all formatting",
        value: stripHtml(local!htmlText),
        readOnly: true
      ),

      a!styledTextEditorField(
        label: "Using Read-Only Styled Text Editor - preserves formatting",
        value: local!htmlText,
        readOnly: true,
        sizeLimit: 1000
      )
    }
  )
)

I used styled text editor, but it's not preserving the html formatting, however it's enabling the links. I used a plugin richtexteditor, this is preserving the format as it is but disabling the links when used in readonly format. I want both the formatting and the links. How to resolve this?

What kind of formatting are you talking about. The styled text editor will render all the formatting it supports when editing.

It doesn't support the exact formatting. This one is using styled text editor, It is rending the links 

And this is using Vuram's plugin richtexteditor. This supports formatting but is not rending links in readOnly

The input to both these functions is the same html code

It doesn't support the exact formatting. This one is using styled text editor, It is rending the links 

And this is using Vuram's plugin richtexteditor. This supports formatting but is not rending links in readOnly

The input to both these functions is the same html code

Sure. What I wanted to say is, that both options, styled text and richtexteditor, are meant to only display HTML created using the same method. They are not meant to display any random HTML from other sources.

But how to I achieve the richtexteditor's formatting and also include the hyperlinks? Is there any alternative approach?

But how to I achieve the richtexteditor's formatting and also include the hyperlinks? Is there any alternative approach?

I do not see a reliable way to do this. The email HTML formatting fully depends on the software used to create the email. You will not see a consistent rendering with any of the two options.