Problem with line breaks

I am importing nodes using Mailhandler. The emails are being sent as html emails, though when sent as text is makes no difference. In the email, the paragraph text flows properly. After importing with Mailhandler, when I edit the node and look at it with TinyMCE, the paragraphs flow properly and looks like this:

Consider the ultimate gift in a homeland security country: the iTaser, a weapon with its own MP3 player and earphones that can deliver a 50,000 volt electrical charge while you catch your favorite tunes. This new Taser, on display at the Consumer Electronics Show in Las Vegas, will be available, reports Richard Wray of the British Guardian, in "red, pink and even leopard print designs." Anyone carrying the iTaser will be able to make what may be the first homeland-security fashion statement in any one of the 43 states where Tasers are legal. The company that makes the weapon, Taser International, has already sold 160,000 less-stylish versions to private individuals. According to founder and company CEO Rick Smith, "Personal protection can be both fashionable and functionable."

When I disable the rich text to look at the actual html, it appears as:

<br />
Consider the ultimate gift in a homeland security country: the iTaser,
a weapon with its own MP3 player and earphones that can deliver a
50,000 volt electrical charge while you catch your favorite tunes.
This new Taser, on display at the Consumer Electronics Show in Las
Vegas, will be available, reports Richard Wray of the British
Guardian, in &quot;red, pink and even leopard print designs.&quot;
Anyone carrying the iTaser will be able to make what may be the first
homeland-security fashion statement in any one of the 43 states where
Tasers are legal. The company that makes the weapon, Taser
International, has already sold 160,000 less-stylish versions to
private individuals. According to founder and company CEO Rick Smith,
&quot;Personal protection can be both fashionable and
functionable.&quot;<br />

And when I display the node, it looks like:

Consider the ultimate gift in a homeland security country: the iTaser,
a weapon with its own MP3 player and earphones that can deliver a
50,000 volt electrical charge while you catch your favorite tunes.
This new Taser, on display at the Consumer Electronics Show in Las
Vegas, will be available, reports Richard Wray of the British
Guardian, in "red, pink and even leopard print designs."
Anyone carrying the iTaser will be able to make what may be the first
homeland-security fashion statement in any one of the 43 states where
Tasers are legal. The company that makes the weapon, Taser
International, has already sold 160,000 less-stylish versions to
private individuals. According to founder and company CEO Rick Smith,
"Personal protection can be both fashionable and
functionable."

It has been a while since I have tried to use Mailhandler, and I had a similar problem in the past that disappeared. I have tried everything that I can think of and played with every setting that I can find, all with no success. Can anybody help me figure out what needs to be done to make the paragraphs flow properly?

Thanks - jarea