Editorial uses Markdown to format the text, so line breaks can be achieved by pressing return twice (essentially gets you a new paragraph tag), as you've found, or by putting two spaces after a line (creates a br tag). See the Markdown guide.

Yes! Caleb McDaniel has a blog post about using Pandoc via DocVerter to do exactly this. Basically, he wrote a Pythonista script that sends Markdown text on the clipboard to DocVerter, which creates a PDF and saves it to Dropbox, where it can be accessed (or even automatically opened via Goodreader URL scheme).

I don't know the first thing about Python, so I'm not sure if this Pythonista script can be ported over to Editorial. But it would be pretty slick if it could. If you (or others) find a way to make this work, I'd love to hear about it here!

Ok, so I got the DropboxAuth workflow working by removing the "proceed" dialog box from the "request token" action.

Now I'm just stuck on the Pandoc script.