I'm not entirely sure what you mean.
So I guess it wasn't clear enough. What I meant was what I said. All those things you're talking about are transparent at the application level. What you type in the box is what the PM engine gets. And it's not unique in this regard; all web apps (except maybe stupid ones which try to meddle in the lower layers) are like this.
We could replace the newlines with <p> tags. But most users don't want this. It would violate the "principle of least surprise". More importantly, given that input can consist of a mixture of html and <pre>-formatted blocks and <code>-formatted blocks (etc.), the problem of determining which newlines to replace and which to leave alone becomes Very Hard Indeed. It's not worth the effort. The result would never be more than 90% right, and that's not good enough. Just suck it up and write your post in html.
I reckon we are the only monastery ever to have a dungeon stuffed with 16,