Have a friend working on my site running WP3.2
She copied some text from an email into TextEdit (Mac) the copied that and pasted it into a post via HTML mode. No funny characters show-up either in HTML or Visual modes but the published text will not word-wrap in the post.
It can see the linebreaks as there are spaces between those lines but paragraphs just go on forever to the right. I inspected in HTML mode and did not find any text formatting, it's all just plain text. I also cut that text out, pasted it into TextWrangler to look for invisible characters, none found. I pasted back in the post and it still would not wrap on the published single post page.
Finally switched to vision, re-pasted that into HTML mode, that seems to have done the trick and the text wraps appropriately in the published post.
We're trying to replicate the steps which caused the issue.