KeyDown Event for 'Enter' results in undesired outcome

Question

Intro
I'm creating a custom Wysiwyg / Rich Text Editor (RTE) because the ones I found didn't fullfill my needs in terms of simplicity and customization.
I have looked at:
- CKEditor
- TinyMCE
- and so on

The Situation
I have a Textarea and an Iframe. The Textarea holds the info from the database. At $(window).load (function () { the Textarea will hide and it contents will be copied to the Iframe with designMode = "on";.

NewLines
Everything works great except the newlines when you press 'Enter'. In every browser the outcome is different:
- <p>: Opera & IE
- <div>: Safari & Chrome
- <br>: Firefox

This is not a solid outcome so I decided that when someone hits Enter a <br> must be put in place. So when someone wants a new paragraphe he hits Enter twice en two <br>'s are placed.

And therefor I build an KeyDown event with keyCode 13 (Enter).
Within the function I prevented the default action with:
- event.preventDefault (); IE9+, FF, CHROME, SAFARI AND OPERA
- event.returnValue = false; IE8-

And then inserted the code for adding the custom <br>:
- pasteHTML IE
- insertHTML FF, CHROME, SAFARI AND OPERA

JSFiddle
Both codes above works in IE7/8/9, Firefox, Chrome, Opera and Safari but then some strange results appear. To see the bugs yourself I've created a JSFiddle here: http://jsfiddle.net/RickS/RZ4Re/

The bugs See JSFiddle above
[1: effects on all browsers] Hit 'Enter' after 'Two' and nothing happens, but hit 'Enter' after 'One' and you'll see the code works. I've figured out that when the cursor is placed before a block element like <ul> <ol> or <p> the <br> will not be put in place.
The bug doesn't appear on inline elements.
Desired outcome: put a <br> in place before a block element.

[2: effects on IE7/8/9] Hit 'Enter' after 'Three' (the list item) and 'Four' disappears. Type something and hit 'Enter' again. Now 'Five' disappears.
And the strange part: click on the word 'One'. 'Four' and 'Five' appear again, and were never deleted. Desired outcome: when you create another list item the contents beneath the list stays visible.

Searched for
I've looked into this problem for over a week now, but can't seem to find the solution anywhere.
On Stack Overflow this article came close I think but didn't resolve my questions: Make a <br> instead of <div></div> by pressing Enter on a contenteditable

The solutions need to work cross-browser in IE9 (if possible also 7 and 8), Firefox, Chrome, Safari and Opera.

I hope someone can help me with this question.
So up front: thank you very much!

Rick