My newsletter content is formatted without any HTML on the content_type Label in the node or the email. Previewing the function copied below, it looks like the variable would be $new_name. If so, is it possible that most css files assume only the site name will use H1 and perhaps H2 or H3 would be a better choice?

Example of what is displayed...

<p>My Content Type Label<a href="http://...">Node Title One</a></p>
<p><a href="http://...">Node Title Two</a></p>
<p><a href="http://...">Node Title Three</a></p>

* Interesting side note. If I open (click to Edit) the Newsletter node, the H1 code is added to the Label; however, the paragraph breaks are removed from the node links.

admin/settings/simplenews/digest_settings
--Digest content: specific content_types are check marked

Excerpt of code from simplenews_digest.module...

// Generate the body of the newsletter
function theme_simplenews_digest_format_newsletter(&$newsletter) {
  // Get sections of newsletter, each section is a listing of links to nodes sorted by content type/date
  $content_types = variable_get('simplenews_digest_content_types', 0);
  $output_by_type = array();
  if ($content_types) {
    $selected_content_types = array_filter($content_types);
    foreach ($newsletter['new_nodes'] as $node) {
      foreach($selected_content_types as $type) {
        if($node->type == $type) {
          $output_by_type[$type] .= simplenews_digest_create_node_link($node) . "\n\n";
        }
      }
    }
  }

  // Nothing to send, no newsletter is sent
  if (!$output_by_type) {
    return '';
  }

  // $newsletter['body'] created here
  $output = '';
  // Sort content by type
  foreach($output_by_type as $type => $content) {
    $new_name = check_plain(variable_get('simplenews_digest_content_rename_' . $type, node_get_types('name', $type))); 
    $output .= "<h1>$new_name</h1>" . $content . "\n";
  }

  return $output;
}