Originally Posted by Patricia
Paste the text file into a word document. Save it.
Open Find and Replace (In the “Edit” menu). You need to make three passes with it.
1. Find ^p^p (i.e. find two paragraph marks. The symbols are in More then Special. The paragraph mark is at the top of the list.). Replace with @ (These act as placeholders to preserve the real paragraphs.)
2. Now, for the second pass, find ^p (single paragraph mark). Replace with a single space.
3. Finally, for the third pass, find @ and replace with either a single paragraph mark, or two paragraph marks if you prefer an empty line between paragraphs.
On a Mac you can just copy paragraphs and line breaks and paste them into the search and replace window.
To the OP: I would suggest using Pages for this - the search and replace seems to be more stable and a little easier to use than in Word. I've done this a lot recently with some books I've re-formatted, and whenever I start working in Word I often find myself shifting to Pages.
When finished, you can export from Pages to RTF - though I would suggest copying and pasting the whole thing into a new RTF document (TextEdit). It gives a 'cleaner' file. The RTF file can be converted in Calibre to for example ePUB if you don't like how RTF looks on the Reader.