There is a bug in OE that drops line-breaks between paragraphs. It isn't ClipMate's fault. One of our users asked Microsoft, and this is what was posted to Usenet:
Newsgroups: microsoft.public.inetexplorer.ie4.outlookexpress
Date: November 24, 1997 3:35 PM
Subject: Re: preserving line breaks between grafs
That is a known bug in the HTML engine used by OE. To work around it, type a space character in the original "blank" line.