Hi Adam,
I've tried your example and it doesn't cause the same problem (ie. it works correctly) -- a second installation of Cute Editor in a different site on our server (the same server) also works as expected, even though I am calling Cute Editor with exactly the same parameters. I assume this can't be a CSS issue, since Cute Editor is actually removing </p><p> tags, so I'm really confused now.
Any quick fix suggestions from anyone who's experienced the same problem would be much appreciated -- otherwise we will rebuild the affected installation which hopefully will solve the problem.
Thanks
Craig