Index: wp-includes/js/quicktags.dev.js
===================================================================
--- wp-includes/js/quicktags.dev.js	(revision 20631)
+++ wp-includes/js/quicktags.dev.js	(working copy)
@@ -638,7 +638,7 @@
 	edButtons[90] = new qt.TagButton('ol','ol','<ol>\n','</ol>\n\n','o'),
 	edButtons[100] = new qt.TagButton('li','li','\t<li>','</li>\n','l'),
 	edButtons[110] = new qt.TagButton('code','code','<code>','</code>','c'),
-	edButtons[120] = new qt.TagButton('more','more','<!--more-->','','t'),
+	edButtons[120] = new qt.TagButton('more','more','\n\n<!--more-->\n\n','','t'),
 	edButtons[130] = new qt.SpellButton(),
 	edButtons[140] = new qt.CloseButton()
 
Index: wp-includes/js/tinymce/plugins/wordpress/editor_plugin_src.js
===================================================================
--- wp-includes/js/tinymce/plugins/wordpress/editor_plugin_src.js	(revision 20631)
+++ wp-includes/js/tinymce/plugins/wordpress/editor_plugin_src.js	(working copy)
@@ -10,8 +10,8 @@
 
 		init : function(ed, url) {
 			var t = this, tbId = ed.getParam('wordpress_adv_toolbar', 'toolbar2'), last = 0, moreHTML, nextpageHTML, closeOnClick;
-			moreHTML = '<img src="' + url + '/img/trans.gif" class="mceWPmore mceItemNoResize" title="'+ed.getLang('wordpress.wp_more_alt')+'" />';
-			nextpageHTML = '<img src="' + url + '/img/trans.gif" class="mceWPnextpage mceItemNoResize" title="'+ed.getLang('wordpress.wp_page_alt')+'" />';
+			moreHTML = '<p><img src="' + url + '/img/trans.gif" class="mceWPmore mceItemNoResize" title="'+ed.getLang('wordpress.wp_more_alt')+'" /></p><p></p>';
+			nextpageHTML = '<p><img src="' + url + '/img/trans.gif" class="mceWPnextpage mceItemNoResize" title="'+ed.getLang('wordpress.wp_page_alt')+'" /></p><p></p>';
 
 			if ( getUserSetting('hidetb', '0') == '1' )
 				ed.settings.wordpress_adv_hidden = 0;
@@ -412,6 +412,26 @@
 				}
 			});
 
+			ed.onPreProcess.add(function(ed, o) {
+				var more;
+
+				if ( o.save ) {
+					more = ed.dom.select('img.mceWPmore, img.mceWPnextpage');
+					
+					if ( more.length ) {
+						tinymce.each( more, function(el) {
+							var parent = el.parentNode, p;
+
+							if ( parent.nodeName == 'P' && parent.childNodes.length > 1 ) {
+								p = ed.dom.create('p');
+								parent.parentNode.insertBefore(p, parent);
+								p.appendChild(el);
+							}
+						});
+					}
+				}
+			});
+
 			// Replace images with morebreak
 			ed.onPostProcess.add(function(ed, o) {
 				if (o.get)