1 - When you edit in plan text mode, all formatting is stripped out. So a double carridge return doesn't start a new paragraph and instead all the lines run into each other.
2 - Somehow, the new forums have completely broken word-wrap, and wrapping is happening at a fixed character width so breaking words up.
We are working on getting these both resolved. Hope to have them fixed shortly.
The word wrapping in Firefox was fixed in our release last night. If you are still seeing this in any other browsers let me know.