This is also causing me a lot of problems. I'm not sure what to do with quicktags.js and am concerned that if I just add an opening and closing p element to lines 63 and 64 I will potentially cause more issues.
In my mind it boils down to TinyMCE refusing to show the p element when in code view.
So, if I attempt to force the correct behaviour for a blockquote, eg:
<p>First line of blockquote</p>
It persists in reformatting this to a variety of things, dependent on whether I save instantly or switch to the visual editor.
Usually returning to code view shows something like:
<blockquote>First line of blockquote
and this renders in a variety of ways. It's quite frustrating and whether I end up with the extra </p> or not, I am still getting validation errors that make it clear that the text within the blockquote must be contained within a block level element, such as a p or div element. I attempted to add a div element, but again TinyMCE persists in removing these and making life a little more difficult.