From the design perspective, the important aspect is to keep the alignment between the blocks of content in source and target content (regardless of those blocks being supported by one tag or another).

When hitting enter, I'd expect an existing block of content to be expanded not a new block to be created.

All blocks of content in the target translation should map to a block of content in the source. There should not be a way to split blocks or create new blocks without a corresponding source mapping.

Copying from the older merged task

The simple way to handle this would be to convert each paragraph created in this way to a usual wiki syntax paragraph - with two line breaks to separate the paragraphs and without any markup. (Another option would be to add <br /> tags on every line break, but it makes more sense to avoid adding any HTML markup to the wiki syntax of the published article without a specific need.)

(Another issue that it raises is how to move to the next translatable paragraph using keyboard and not mouse, but that's a topic for a separate design task - T109056.)

Change 272449 had a related patch set uploaded (by Santhosh):
Consistant line break behavior for sections

https://gerrit.wikimedia.org/r/272449

Screenshot showing a paragraph split restored against source section successfully.

Change 272449 merged by jenkins-bot:
Consistent line break behavior for sections

https://gerrit.wikimedia.org/r/272449

I verified this in production with Chrome and it seems to work—thanks!! It was one of the most annoying things.

Not closing this yet, because I'd love another little round of QA in different browsers.