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Yes, sure. One could also argue that it should never close a quote when there it has no opening quote to partner it. But that's simply not how the code works at the moment. It's called smart punctuation but it's really just a simple heuristic which may or may not work.
It actually works quite well all things considered, but with strange formatting such as these space characters it fails.
Also I'm not sure if the original code has a concept of paragraphs at all, looks more like it's originally designed for plain text, such as what people write in a textarea form field.
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