Bug 126259 points out a common problem which happens when you have a line break adjacent to an <img> tag which is inside a link: the line break is treated as whitespace and displayed as an underlined space, i.e. a blue (or otherwise link colored) underscore. This is a bug in layout -- it's clear from the W3C spec that the linebreak is supposed to be treated as insignificant whitespace -- but even if we fix this bug (bug 20163 and/or bug 1777), many other browsers (including NS4) also have this bug, so we shouldn't produce html which will trigger it. Bug 126259 took out the forced linebreak that prettyprint was adding, but we'll still add line breaks sometimes during the course of wrapping. The wrapping code in the html serializer should be smartened, so that it never emits line breaks in situations that would be visible in a browser.
Parser bug, not a layout bug. See bug 2750.
Probably a layout bug. The parser can't discard that information -- it keeps formatting whitespace for completeness, and so that something resembling the original document can be regenerated by the serializer. (I'll say so in that bug, since apparently it's not clear.)