The example was a little bit funny . I try it again, the example (line numbers and comments are not part of the text):

1.    text    // space follow by text
2.|           // caret at the beginning of a blank line

When I hit return in the above example the next line will be like this:

3.    |       // space and caret at the end of the line

I would like no auto indent in this case, because the previous line (2) has no indentation. Like this:

3.|           // caret at a blank line.

Hope I got my point through this time!

Yes, the indenting code looks for the last non-empty line for its starting point. It would be a trivial thing to change if you wanted to compile jEdit yourself.

Otherwise, I'm now wondering why the indentation of a blank line matters?

When writing code like Java I don’t think the indentation automation style matters (my style or current style). But it has annoyed me several times when wring non code text, I give you two examples bellow. In general I think automation is good, but I should rather do to less than to mush. Used when the user don’t want it is mush more annoying than the benefit of using it when the user wants it. An example is MS Word’s numerous text automations that I rather live without. The plain text examples:

* Text..............................
  ...................................
* Second.....................
  .................

And:

Item 1	15
Item 2	20
       ---
        35

In cases like this and you make some empty lines after the text you repeatedly have to delete indentation.