Hi,

(In the following, >>text<< to express that "text" is selected.)

With:

--8<---------------cut here---------------start------------->8---
abc >>def<< ghi
--8<---------------cut here---------------end--------------->8---

running C-c C-e c + TAB gives:

--8<---------------cut here---------------start------------->8---
abc
\begin{center}
  def
\end{center}
ghi
--8<---------------cut here---------------end--------------->8---

So far, so good. Now, with 

--8<---------------cut here---------------start------------->8---
abc
>>def<<
ghi
--8<---------------cut here---------------end--------------->8---

we obtain:

--8<---------------cut here---------------start------------->8---
abc
\begin{center}
  def
\end{center}

ghi
--8<---------------cut here---------------end--------------->8---

The empty line before `ghi' is unexpected IMHO.

WDYT?
-- 
Denis

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