Kiwi - thank you for the extremely detailed explanation! Sure enough, it was the <blockquote> vs <p> problem that you mentioned. You also got me thinking about using epub as my master format in conjunction with the Quality Check plugin.
I have to admit I was hoping the "Ignore Margins" function would work (easier for batch corrections), but I didn't notice any changes for this particular problem. I'm assuming that was because of the <blockquote> tags?