No, I'm using 1.2.6. However, I'm not sure if what's happening to me is problem you're referring to. As I wrote, even when I don't put in a hard return, TinyMCE still seems to be inserting br tags.
I've noticed nightly builds mentioned in other threads — is the expectation for users to use nightly builds instead of official stable releases? I'm not used to do things that way, but if that's the better way to go, I will do that.