I believe that H2O used to be written with 2 as an exponent, which
makes sense, since it is HHO.
Is this really true? If so, why was it changed?

Subscripts (under the baseline) are commonly used in chemical formulas. 

"A chemical formula (also called molecular formula) is a concise way
of expressing information about the atoms that constitute a particular
chemical compound. It identifies each type of chemical element by its
element symbol and identifies the number of atoms of such element to
be found in each discrete molecule of that compound. The number of
atoms (if greater than one) is indicated as a subscript (although
19th-century books often used superscripts)."

http://en.wikipedia.org/wiki/Chemical_formula

However, online text displays often transmute a subcripted digit into
a standard-size digit. Look at this page in the original, and then
notice what Google Answers has done with the subcripts:

"A subscript is a number, figure, or indicator that appears below the
normal line of type, typically used in a formula, mathematical
expression, or description of a chemical compound. Probably the most
famous example of a subscript is the number 2 in the formula for the
molecule of water: H2O.

Typographically, subscripts are set with a lower baseline and a
smaller size than the other text. For example, to set H2O correctly,
the 2 should be about two-thirds the size of the H and the O."

http://en.wikipedia.org/wiki/Subscript

Eeek. Typo. For "notice what Google Answers has done with the
subcripts" in my comment above, please read "notice what Google
Answers has done with the subscripts."

Tch, tch,  I'm tempted to cancel my subcription.

Don't cancel, Paf. Just switch over to "Tales from the Sub-Cript."

I don't recall ever seeing H2O with the "2" raised rather than
lowered.  However, in the early days of modern chemistry there were a
lot of different schemes for writing molecular formulas, so I wouldn't
be surprised if someone did it that way.  I'm pretty sure that it was
never a "standard" way of doing things.

When dealing with isotopes, superscripts are often used, could that be
what you remember seeing?