In the wikitext editor, the only way to create multi-paragraph citations is to explicitly wrap the paragraphs in <p> tags. Any line breaks in the source are silently dropped from read mode.
In the visual editor, you can place line breaks within a citation simply by hitting return. After you add them, they will display in both the citation inspector and the citation list. If you open a page which has a preexisting citation with linebreaks, the linebreaks will not display in the citation inspector and will display as arrow characters (↵) in the citation list.
In both cases, the breaks will not display at all in read mode.
We should either:
- prevent the user from entering line breaks in basic citation dialog, or
- preserve any line breaks the user does enter using <p> tags.
Personally, I lean towards 2.
