Paragraphs and Line Breaks

With my input formats I restrict the use of
and
in HTML Filters. Now my users want to be able to use single line breaks in conjunction with paragraphs. So I turned on the

in HTML Filters and tried a shift+enter. It worked, I submitted my story and afterwards I notice that in between every paragraph, even where I didn't shift+enter I am seeing

content

more content

and so on, with a
between every single paragraph resulting in huge spacing. This isn't happening to me in firefox for some reason but it is a requirement that my Ie6/7 users be able to use this.

Am I doing something wrong? Is tinymce entering
inside the editor's iframe for display purposes and counting on you to strip them with HTML Filters? In the wysiwyg profile edit screen I have Remove linebreaks checked. With so many places to choose from perhaps I just have the wrong combination...

Help appreciated