Has it really been over a year? I can’t believe it.
An unassuming little script, called “autop” and titled New Lines to Paragraphs was one of my earliest attempts at massaging plain text into smart XHTML, and it has come a very long way since it first started. (See the legacy code.) The code is not perfect, and it may never be, but it has worked very well for an impressive number of people, and I value that.