It seems LF-LF is inserted at the ends of lines, instead of CR-LF.

If the process encoding is set to `utf-8' instead of `utf-8-dos',
everything is fine, there are no extra blank lines.  The problem was
present already before applying the additional patch.  I think it wasn't
present in untouched Emacs 21.3, but I'm not sure.

Regards,

Milan Zamazal

-- 
The seeker after truth should be humbler than the dust.  The world crushes the
dust under its feet, but the seeker after truth should so humble himself that
even the dust could crush him.                                 -- M. K. Gandhi