I’m having the same problem. I see the post exactly how I want it to be displayed in blog but it looks like the newlines are either not being translated or are being trimmed. Also the paragraph tags (<p></p>) are being used at all! This also causes problems on my blog.
Also, when I switch from the “Visual” to “Code” tab, a lot of my formatting is lost when I switch back to “Visual”. I’m starting to think the editor itself is the problem since none of the tags are being used but the formatting is still present until you save the post or switch tabs.
To temporarily remedy this problem I’m using the standard textbox editor. Hate it but it’s a temporary work around.