Okay, an update to my post above, and also to your bullet point issue possibly.
The Editor seems to only understand <p> tags, so if you have the parameter:
oContentEditor.BreakElement = "p"
in your code then every time you press enter, you will start a new paragraph. So, type three lines of text and hit enter (thus each will be a new paragraph and hideously spaced out) . Highlight all three and press the UL button and IT WILL WORK.
But only with <p> tags. If you tell the Editor to use <br> tags (my preference*) then the block-formatting routines have a fit and don't take that parameter into account and continue to look for <p> tags.
That's a bit backwards. You can't ask a developer to state what their preferred break character is and then merrily ignore it in any functions!
Now I need to see if I can use the Editor's stylesheet parameter to state that <p> tags shouldn't look so butt-ugly.
* ps for real XHTML support, <br> tags are represented as <br /> tags. Does the Editor understand this? Nooo. Don't advertise the Editor as being fully XHTML compliant as it is way off the mark. Plus the .XHTMLOutput=true parameter will utterly bugger any inline javascript you might have in your text. You'd be surprised how much post-processing I have to do on the content before I put it in the database to make it vaguely XHTML and stylesheet-friendly.
I would think after 5.x revisions, this editor would be closer to being a streamlined product. It's a bit of a hash-up at the moment, isn't it? Different functions don't know what they're meant to be doing, pop-ups look bland and don't understand that not all users like to lose their toolbars...