The decision to use the flyout for the grades page feedback is a bad one. I had been directing students there to check for comments because it was one of the few places in the web interface where the comments retained the line breaks. Now that is gone.
I have a lot of complete/incomplete assignments and leave lengthy feedback about what needs to be fixed. It makes very little sense when ran together. Plus, I tell my students to use paragraphs and then it looks like I don't follow my own advice.
At the end of the last term, I did an analysis of student behavior in the course and how it tied to their final course grades. We found that looking at the grades page was one of the items that showed a high correlation with final score. I thought it was because students who check their grades are conscientious about things, but this reminds me that I had told them the grades page was the place to go to be able to read my comments in an understandable manner. Maybe it's because the students who checked the grades page were able to understand the feedback.
If you do not allow us to enter HTML into submission comments, then you need to display it in a way that what little formatting we can provide is retained instead of running it all together.