I was unclear. I commented your statement "No, that's not true. MobiPocket (the Gen3's implementation of it, at least) will break a line at a hyphen," so you were talking about hyphens also.
In Swedish we use spaces around emdashes. In TeX I prefer to put a thin space before and after an emdash. Breaking a line at an emdash seems to me to be bad typography. It is something that stands out and will attract attention.
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