You better use the Text area mode and it will work well.
<textarea name="" cols="" rows="100">
<?php
$filename = "../projectevo/emeraldcity.html";
$handle = fopen($filename, "r");
$contents = fread($handle, filesize($filename));
fclose($handle);
echo $contents;
?>
</textarea>
I have used this method and it works perfectly.
It should render something like this. And you could directly type to the table
And initialize like below
tinyMCE.init({
// General options
mode : "textareas",
Instead of your
selector: "div.edit",