Any sort of "global" conversion like
s/(?:\r?\n|\r){2,}/<P>/g; would of course need to apply
only to regions that are
outside of code tags. Maybe the PM source code would support this with little or no fuss, but I haven't seen the code, so I don't know.
Personally, most of my time and effort during PM posting is in spent thinking about what I'm writing, and crafting my words, code and presentation to be as clear as I can; so holding down the shift key for a fraction of second while I type <P> might not be a big enough issue to warrant someone else spending many hours to simplify it for me.
(update: you do know, of course, that the "P" can be upper-case, don't you?)
(another update {geez, why can't I just leave this alone?}: Any sort of change like this would need to be backwards compatible, both with the established archive of posted data, and with the established habits of many monks. If the approach for such a change requires the elimination of paragraph tags, it won't work. For that matter, if the above substitution were applied to the existing archive, it might have "unintended consequences" -- paragraph breaks appearing where node authors did not intend to put them. Things could get weird and tricky...)