Not sure my situation is the same as yours.  My text fields are defined as multi-value on the form with "New Line" as the only valid separators defined.  I experienced inappropriate wrapping as well & line breaks in weird places when using the multi-line edit box control (I don't use the "multiple separator" parameter at all).  How I got around it was to use a custom converter for the edit box:

 

 <xp:this.converter>
      <xp:customConverter>
           <xp:this.getAsObject><![CDATA[#{javascript:@Explode(value,"\n");}]]>          </xp:this.getAsObject>
            <xp:this.getAsString><![CDATA[#{javascript:@Implode(value,"\n");}]]></xp:this.getAsString>
      </xp:customConverter>
 </xp:this.converter>

And I also changed it so the edit box is only used for EDIT mode.  For READ mode I use a computed field, displayed as HTML:

 

@Implode(<datasource>.getItemValue("<fieldName>"),"<br>")

 

A bit of a pain to have to have 2 fields for every mutli-line text field, but it works.