Last modified: 2014-09-02 06:04:18 UTC
Typical article using {{DISPLAYTITLE:}} has that function on the first line, then line wrap and then infobox or start of the text. Currently that creates empty paragraph on output -> the article content starts further down from headline than regular articles do.
I'm pretty sure that if we changed this we would see a lot of complaints as soon as it was deployed.
I'm pretty sure that it was working that way before update to weaken restrictions.
You should definitely change the behaviour to *not* add blank lines. I've seen many articles on Wikipedia with ugly excessive vertical space after page title due to this error. Common templates (e.g. http://en.wikipedia.org/wiki/Template:Lowercase) even work around this issue by including the {{DISPLAYTITLE:}} template in a <span></span>. I can't think of any case were newlines at the beginning of the page are actually needed so I can't imagine you'll break anything or receive any complaints.
Code update regression can't be marked as enhancement. Changing.