I've done some more testing on http://cutesoft.net/example/general.aspx and everything is still not working as I described earlier in both mac FF and mac Safari, but the </embed> tag is preserved in IE7.  In IE7 Cute Editor does not strip the </embed> tag, however, IE7 does still strip the one-line ending (along with all the other browsers I've tested).  So <embed blahblah /> still turns to <embed blahblah> when toggling between HTML and Normal view.  I've had a co-worker test all of these scenarios, too, and he's experienced the same as I have.  We both have FF's WebDeveloper plugin installed, but we experienced the same problem in Safari, which didn't have any plugins installed.