I'm seeing an issue in the new WP8 version where the "remove blank lines" setting doesn't seem to work when it's set to "no". Specifically, I have a book where the code looks like this (suboptimal, probably slightly incorrect, but it is what it is):
Code:
<p class="para">It was time to fight.</p>
<p class="spaceBreak"> </p>
<p class="paraNoIndent">Barriga stumbled as he crawled past the stump of a fallen tree. Blood from his brow dripped onto the ground, and the dark-speckled nettles seemed to soak it in, feeding upon his life. He raised a trembling hand to his brow. The bandage was soaked through.</p>
That "spaceBreak" paragraph is intended to create a space between the two paragraphs, and I would expect with "remove blank lines" set to "no" Freda should do the right thing. Instead, Freda is actually removing that blank line. See the attached picture, for example.