In PRE elements, newlines that appear inside inline elements (CODE/STRONG/etc.) are converted to spaces in the editor. The loss occurs when the content is being pulled from the TEXTAREA.
The Fiddle has a pretty clear demonstration.
I started to see this behavior some months ago after a WordPress upgrade. It's possible that WP was formerly converting all newlines to BRs before passing the content to TinyMCE, but it seems like a TinyMCE bug nonetheless.
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