Not to mention applying blockquote operators to Blogger in Draft text with Safari causes new space doubling.
I fear it's all tied up in the ancient wars between unix, mac and dos (yes, DOS) around CR, LF and CR/LF pairs.
Interestingly IE 8 behaves like Safari 4, so Firefox may be a bad actor.
Update: It's worse than I'd thought. I wonder if Google is screwing this up again, I remember a period about a year ago when the line spacing behavior went berserk.
Update 5/23/09: I've experimented further. It's fubared. I have learned that if one uses the rich text "remove formatting" tool the formatting becomes more predictable. It's the interaction between source text formatting and the rich text editor that makes things really messy. I wonder if Google is giving up on blogger.