I think a lot of us have sites where 2 kinds of emails get sent out: WP default emails (that all sites send unless disabled) which are non-HTML, and emails sent by other plugins like WooCommerce and Gravity Forms that include HTML. The setting currently works for only 1 of those 2 kinds of WP-based emails. It either makes one look good and ruins the other, or vice-versa.
How about an option that turns on "Replace all line feeds ("\n") by
in the message body?" for all default, built-into-core WP emails, but turns it off for everything else? Since core emails are a finite and well documented set, why not just allow those to be automatically filtered and leave all the rest alone, instead of making us have to do custom development to get the best of both worlds?