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@GreenMonkey
I had the same problem and this worked for me, not sure if it will for you but am happy to share what I found. Open the rtf in Word and then save it as Other File Type --> Web Page, Filtered. Then import the new file into calibre and covert it using calibre to epub. Leave the option to remove extra blank lines unchecked. Each time I have done this I end up with an epub that retains the original blank lines (change in narrator, change in scene, other intentional blank lines, etc) but it no longer has a blank line after each and every paragraph, line of dialogue etc. No idea how or why this works, but it does for me....hope it is of some help to you!
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