Breaking WP’s auto-paragraph formatting?

Here is something I only now realized as I had never realized before as it seemed a bit counter-intuitive.

If you have the visual editor turned off, posts written in WP and published all get their blocks of text auto-paragraphed. That’s not new.

Because it happens all the time, I assumed that WP would auto-paragraph all paragraphs of text, paragraph tags pre-existing or not.

What I discovered in trying to code complex (but W3C valid) nested lists is that if you code in your own paragraph tags (for example, let’s say you need to write three blocks of text of description for something and said something is in list form), WP will NOT add additional paragraph tags.

What is strange is that I could have sworn that I had attempted to do just that – code in my own paragraph tags and such when writing out lists in WP – but WP completely messed up my tags.

So I guess my question is this:

Has this whole ‘break the auto-paragraph’ feature been implemented into WP all this time all along? Have we ALWAYS been able to break the auto-paragraph feature by adding the tags in ourselves?

Does WP simply look at all posts and if there aren’t any paragraph tags surrounding blocks of text, it auto-inserts them, but doesn’t insert them when it sees the paragraph tags?

Boy don’t I feel kind of stupid. I sure wish I had thought to simply dump in a full XHTML-formatted post into WP and post it as is and see what happened.