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Actually it does use indentation to detect paragraphs. Basically if a line is indented and the next line is not, it is considered the beginning of a paragraph block. A short line break is detected if no other type of block/code is detected and the line is indented and doesn't quite go to the end of the line (10 pixels).
Although that could easily be made a configuration option as well.
Thanks for the feedback. I hope it proves useful.
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