Just go to the embedded file processor, select the corresponding HTML file type and declare the BR tag there to external.

Edit: I think I misunderstood you, and the behavior is exactly the other way round. If so, locate the BR tag in corresponding HTML settings and declare it to inline tag. But from what I remember if I use HTML 5.0 it will not segment at BR.

I mean the HTML embedded content processor itself. It has its own settings:

Depending on your needs set this tag to inline or structure. Decide, if it may be excluded (default) or must be included (or included only with text).

I never realized there were separate  settings for the embedded content processor.

Still, it seems like those "br"s aren't what I'm looking for.

Also, I just realized it's escaping the special characters (if you look at the apostrophes).

EDIT: I gather I can simply disable the "Entity conversion" in the embedded processor to stop escaping special characters? (Now that I know you can fiddle with the embedded processor settings). :P

Yes, these breaks are between the end of an ordered list and the start of a custom tag, but they also disappear in simple breaks, so I thought they were simply breaks!?

Another example of several 2 line breaks in a row (with tabs in the empty line):

Yes, normal "line feeds" it seems. Studio is eating them up when between tags. :\

That is exactly what I did as well (developing a new filetype filter), but I still have 3 issues with it:
- those pesky square bracket tags you mention (which we can easily work around, this is a minor inconvenience);
- the line feed breaks that Studio "eats up" when between tags;
- the encoding when generating target files that I can't seem do disable.

I haven't tested the "Embedded processor settings" fully (I didn't even know about it, thank you Jerzy), so maybe the solution to my two deal-breaking problems is there.

EDIT: It turns out, the solution was exactly on the Embedded processor sub-settings (but at the project level, not the tool's general settings. Thank you so much Jerzy. :)