I did a lot of stuff with blockquote experimenting in
this thread. I think there are code examples and attachments included. It has more to do with blockquotes and negative indents, but...
There's also my version of the Shahnameh here in the Free MobileRead Library that has lots of poetry and various blockquoted material. I even made two different MOBIs—one for devices and one for apps. Mobiunpack.py would allow you to see what's going on inside either one. You can search for Shahnameh and it should come up first or second (there's an ePub version as well). I don't know if posting a
link to my own material here would be seen as offensive or not, but I'll take a chance.