Ha ha, I was just about to try pasting at the end of the previous line. And I suspected there would be an extra paragraph mark. I'll go play with that.

Update: here's what seems to work (as suggested by that helpful Andrew):
1. Place the cursor just before the paragraph mark of the previous paragraph of where you want insert.
2. Press enter
3. Paste the text
4. Press delete to remove the extra empty paragraph.
5. Say: Good grief Microsoft!

Another update: It seems to work okey, but I haven't been able to find a way to insert new text into line 1., so that line 1. becomes line 2. The xrefs below become corrupted again.