In 3.1 the splash widget has been re designed (internally) and you have to do more HTML formatting to get the look you are after. All you really need is to add some <br>s in the HTML code.
The default height and width of the dialog changed from 500 to 300 which is probably giving you the results you are seeing as well. This can be configured in the tag using both height and width tags.
Did you ever figure out how to get the html text to "word wrap" like it used to?
I see the same thing in the "About" window, have not figured out how to get it to wrap. Doesn't seem to matter if I <br> it <p> it or anything that I've tried so far.
I got bit by the missing word wrap as well. It screwed up my splash and about box. If you're compiling yourself you can get word wrap back by deleting line 136 of HTMLPopup.mxml. It looks like this: