The unwrap factor of 1.0 is far from the "maximum", if I recall correctly. The factor seems to have an inverse relationship to Calibre's aggressiveness about merging a short line into a paragraph. Smaller numbers => shorter lines considered appropriate to merge with the paragraph. Try a factor of 0.25 (which is probably too little, but demonstrates the effect) and see if it helps.
Also note that there are two separate places to specify the unwrap factor, each for separate purposes.
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