Let's look at the intention of the feature:
The problem people were having was that accidental pastes would potentially flood channels, and often with private information. These accidental pastes were only sent to channels when they included more than 1 newline, otherwise they would not actually get sent to the channel. Therefore, to guard against these accidental pastes, mIRC created a feature to warn you when you paste a large amount of text that would potentially flood you off the server.
It was in this context that the feature was born, AFAIK. In this context, "a line" doesn't make sense if it does not include a newline, since lines without newline endings don't cause a problem with accidental floods (or accidentally exposing data to the server). When there is no ending newline, the data stays in your editbox, so there's no real reason for mIRC to warn you of anything. Therefore, it seems much more reasonable to interpret "1 line" as "1 line with a newline ending". It seems unreasonable, to me, to warn a user whenever they paste any data even if it was not being sent to the server-- do you really need mIRC to have you confirm anything you paste? Again, that was not the intention of the feature-- the feature had to do with ensuring that data was not accidentally sent to the server, not to act as training wheels for your keyboard.
