The comment will be highlighted as such until after ^M.  Any text that
    is inserted after it is coloured like a string, until the next double
    quote, until after a number of lines (consisting of a mix of comments,
    blank lines and Lisp code), or until the end of the buffer.

    It seems that ^M is considered as a line break (incorrectly in this case).

This is done explicitly, for the sake of selective-display
according to the comment.  That is probably obsolete, since the modes
that would do selective display on Lisp code probably now use
overlays.  So I will take it out.



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