[retiredbiker]

What you really want here is paragraph styles, and I don't think rtf is smart enough to support them. If you were using LibreOffice Writer (or Word) you could apply styles there, in the manuscript, and let Calibre convert the odt or docx file. It looks like your azw3 is getting the same style for each paragraph in conversion, at least for spacing.

For the html in the azw3, you want to end up with something like this:

For the main paragraph, something like

<p class="mainpara">your text</p>

With the CSS code

.mainpara {
text-align: left;
margin-top: 1.5em;
margin-bottom: 0;
}

Then for the subsequent lines,

<p class="subpara">your text</p>

With CSS code

.subpara {
font-style: italic;
text-align: left;
margin: 0;
}

There can be other codes in there for fonts, or font-size or whatever you want, but the above should make the spacing right. And you don't want empty paragraphs for any spacing, which is likely how the rtf is doing it--the styles will take care of that. And you shouldn't have to mess with line heights for this.