It is simpler to fix the HTML than to fix the Epub, so why should the Epub retain the line breaks?
Sorry, if you say that tidy is only being used to generate epubs not to modify the posted HTML then fine. On one of my previous HTML submissions a WW said he had run tidy on it. Obviously the intent is to allow future DP'ers or PG'ers who have figured out a better scheme, TEI Lite or whatever (hypothetical), to make another DP pass or solo on the effort by extracting the already "corrected" txt matched against the original OCR rather than having to start again "from scratch." And again pgdiff can extract linebreak info given a txt which has lost linebreaks and an OCR that retains them, but, its still cleaner and easier not to have lost them in the first place.