Like I mentioned earlier, if you change --indent yes to --indent auto in the tidy command you will get:
<h1>Hello, world!</h1>
<ul> <li>first</li>
<li>second</li>
<li>third</li> </ul>
it's still not perfect (it likes to screw up php and it has those extra lines) but it's still better than having 3 lines per li or h1 or whatever. i've never found the setting that stops it from adding blank lines between </li>.
auto indent also helps to prevent IE bugs due to significant- insignificant whitespace when it wraps everything.
On Sep 14, 2009, at 3:59 PM, Steve King wrote:
<h1> Hello, world! </h1><ul><li> first </li> <li>second</li><li>third </li> </ul>
-- Jacob Coby