Hello again,
1) Paste this into the text editor in 'Normal' mode:
Header
Text
Text
Text
2) Place the cursor on the first line. Press Heading 1.
3) All 4 lines will be changed to <h1>.
4) Undo changes in (2) & (3), now highlight the first line (Header).
5) Press Heading 1. All 4 lines will be changed to <h1>.
I also noticed that this behaviour doesn't happen if the text is typed in (rather than pasted). The HTML for the typed in content vs the pasted content differs; the typed in lines are separated by <div> tags, whereas the pasted content is placed within a <div>.
Thanks!