Hi Brad,
1. Yes, "Preview" button submits an article but no one can read it, except site administrator and author. When article has such state, author can view "Publish" button below the article text, that makes articles finally published.
2. Carriage return creates a new paragraph. If you don't like default spacing between paragraphs, you can do follow:
a) open file templates/MetallicGlare/view-article.tpl, line #94
and wrap it in DIV
HTML Code:
<div id="article_body">{$article.body}</div>
b) after that, open filec templates/MetallicGlare/css/main.css and add to bottom
Code:
div#article_body p {
padding-top: 15px;
}