One complaint I have with the markdown js (not your plugin) is that when you quote text, it truncates it all, making it quite difficult to read. Today I managed to "fix" this, by removing the following command from markdown.min.js:
f.wrap(a,d.wmd_env.lineLength-2),
or from wmd.js:
command.wrap(chunk, wmd.wmd_env.lineLength - 2);
Now it just adds quote marks to the beginning, as seems reasonable.