Excellent idea for a K.I.S.S. formatter, though it might be worth considering recognizing multiple spaces or tabs as non-breakable spaces, and keeping entered newlines as actual newlines.
I put a short excerpt from a novel being discussed in an author group for us to use as a reference into txt.fyi but as it was directly from the book, and used indentation for paragraphs instead of blank lines, it came out as one large blob of text instead of looking the way it did in a text editor.
What on Earth am I talking about?
Text excerpt as entered to txt.fyi.
Text excerpt as formatted by txt.fyi.
Text excerpt as hand formatted.
Great idea, though! Should be very useful.