If you look at the HTML that is generated, I very much doubt if you will see any line breaks. What I expect you are seeing is paragraph breaks with a style (which is normal default for HTML) that specifies a paragraph break should add some white space.
Another point is that in HTML multiple consecutive paragraph breaks are typically treated as a single paragraph break.
On that basis, the behaviour you describe is exactly what I would expect.
It sounds as if in the original RTF file the author has tried to use blank lines to separate paragraphs? This is not abnormal in files where the author has mixed up the use of paragraph breaks to simply indicate end-of-line and also to indicate genuine paragraph breaks.
What I am not sure from your message, is under what circumstances you want their to be space between paragraphs, and when you do not want this behavior?
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