1) That is by design. The font size cannot be applied to a blank selection. the font size is applied by adding a span tag around the selected text, if no tet is selected, the span tag cannot be inserted.
2) I am not able to reproduce this.
I have an html editor instance set to use the BR Enter mode as well, if I hit the return key, a BR tag is applied at the end of the string for each return I hot.
Click on the Source button to see how the br tags are being applied. It could be a conflicting style causing the other br tags to be ignored.