Received a reply on the bug report. The change in behavior between 5.8.8 and 5.10.0 represents "an intended change of behaviour (a bugfix)". The fact that the AS distribution behaves well reflects non-standard patching implemented by AS (Change 24412). Incident is closed, though it seems to me like this patch also needs inclusion in the next distro of 5.8.x.
in reply to Re^3: Reading a text file collapsing line continuations
in thread Reading a text file collapsing line continuations