Hi lamw,
I believe the version count got run up by my network engineer who is debugging this issue and did a lot of testing on this document yesterday. And I believe he is the one who changed the formatting (by viewing the doc in edit mode using the RTE, which adds extra spacing). I haven't seen any evidence of the application destroying content.
I'm giving high priority to the "form has been..." bug, and will update when I know more.
Thanks, Robert