MailMerge v1.4 now includes a revised function to support new-lines (char:10 or Alt+Enter) wrapped (or added in formula) in text fields.
It is implemented by cloning the RichText styling around the token, explicitly adding to the text and newlines to the document structure, then deleting the token text.
This works great in my Notes 8.5.2 client so I've released this in the hope this is stable enough for general use, however it still regularly crashes when debugging, so your milage may vary.
If any issues occur using this function, then either modify your source worksheet to remove newlines, or modify the 'replaceTokenInBody' function code to remove the char(10) check (use the default 'findAndReplace' method.