mIRC could possibly invent its own way of handling DCC chats, allowing users to transmit data one character at the time, and only displaying a line break when an 'A0' (line break) character was transmitted.
It probably wouldn't be compatible with existing implementations, though, and it might confuse users who mistakenly write something in the chat that they do't want the other person to see, as I'm sure has happened to many users on ICQ.