...I think softbreaks are linebreaks after some tags like <table>, <p> and hardbreaks are after <br> tag.
I must say that I never understood what IPro's SoftLFs and HardLFs are good for.
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wp, I tried it, it looks okay.Committed it. Did a few more tests, no apparent issues. Still, the entire SoftLF/HardLF thing is a mess and should be reworked from ground up. (For example, the same issue that you report exists for list tags).
I found another new bug introduced in newer lazarus versions look at the screenshot, the text "Free Pascal" should be transparent like in lazarus 1.8.This must have come in when somebody asked for rendering text with background color. I'll have a look, maybe I find it in the commit notes (but I don't make promises - IpHtmlPanel is a pain to work in...).
Edit2: I had on my usb stick one lazarus version Revision 61029 maybe lazarus 2.0.2 from year 2019/2020. Iphtml.pas file the last change date 2019-04-22. This version has not the new color bug.