Hi @cjudge,
In general, the notifications are meant to give users a quick idea of what the announcement is, not be a total replacement for visiting Canvas to read the message. Many notification methods (like mobile apps, for example) are plain text-based, and Instructure probably wanted to at least keep parity between the different notification methods people can pick from. I definitely understand that it may completely throw off the message if you've embedded an equation and are referencing it throughout the announcement though. That's not a great experience at all, but I'm not sure that there is a tech-feasible way to address this one.
I know this is more of an explanation of behavior than an answer, but I hope it at least shows why things are happening the way they are right now.
-Chris