The present invention relates to kits and methods for efficiently generating 5′ capped RNA having a modified cap nucleotide and for use of such modified-nucleotide-capped RNA molecules. In particular, the present invention provides kits and methods for capping RNA using a modified cap nucleotide and a capping enzyme system, such as poxvirus capping enzyme. The present invention finds use for in vitro production of 5′-capped RNA having a modified cap nucleotide and for in vitro or in vivo production of polypeptides by in vitro or in vivo translation of such modified-nucleotide-capped RNA. The invention also provides methods and kits for capturing or isolating uncapped RNA comprising primary RNA transcripts or RNA having a 5′-diphosphate, and methods and kits for using a capping enzyme system and modified cap nucleotides for labeling uncapped RNA comprising primary RNA transcripts or RNA having a 5′-diphosphate with detectable dye or enzyme moieties.