@episodeyang your idea sounds promising. In general, it seems to me that this is something that is best handled at the renderer level (either automatically as you suggest or through an option), rather than in the parser.
EDIT: pandoc does have a Markdown extension ignore_line_breaks which does affect the parser; it causes newlines within the paragraph to be ignored rather than being treated as spaces or as hard line breaks. It also has east_asian_line_breaks, which causes the newlines to be ignored when they occur between two East Asian wide characters.