I'm using UltraEdit -- but you should be able to do this in most other programs.
The Macro for PCGEN tabbed to Paragraphs just goes:
FIND {paragraph mark} REPLACE WITH {tab}###
FIND {tab} REPLACE WITH {paragraph mark}
I only run the macro within selected text, instead of the whole file -- don't want to convert the header rows for instance. In effect, it converts the lines to paragraph-mark-delimited text, with ### (or some other string that you're confident won't appear elsewhere) serving as the end of item delimiter.
To convert back basically just have a macro that does the opposite:
FIND {paragraph mark} REPLACE WITH {tab}
FIND {###} REPLACE WITH {paragraph mark}
It creates some junk tabs and empty lines, but those are okay to ignore or easy to clean out. Someone with actual skillz could, I'm sure, do a better job.
I also think it would be fairly easy to just build into PCGEN if you wanted to switch into a different file format -- simply allow ### delimited files and have PCGEN run the formatter before loading the .lst file. Though I imagine working with two different file formats could cause problems.
I will definitely say that it's much easier to read and edit the converted files. No trying to keep track of things in column 1500 and I've found that doing data entry is easy, since I can just scroll down and paste say, SOURCE information in a bunch of entries, or easily copy and paste pre-reqs between feats, or, for long items, have text wrap and line numbers on so I can tell when the field ends.