if %cursor% is used within a <p>   paragraph </p>  tag it breaks this apart
into 2 and effectively returns to the "body" level on the email.

Template:
<p> %cursor%
</p>


creates the following HTML
<p> </p>
[CURSOR]
<p> </p>

The Format Selector shows "Body Text" 

Expected behavior:
<p>[CURSOR]</p>

Created an attachment (id=8152) [details]
1.2 prerelease 30 - fixed

This is fixing the problem. It will be especially helpful in the up and coming
version Thunderbird 45.0 which has a fix for

[Bug 330891]  Composition editor: Return/Enter inserts line break <br>, should
insert paragraph break <p>; also implement Shift+Enter for <br>

... so that paragraphs can be easily generated by hitting Enter (once)

Created an attachment (id=8162) [details]
1.2 prerelease 46

another problem with cursor fixed (the rest of the template after %cursor% was
ignored)

fixed in release 1.2