Sorry, typo. I have Thunderbird 102.5.1 (32 bit)

I have tried, but cannot duplicate what you are experiencing. However, I'm using 64-bit version.

I just upgraded to the 64 bit version and still have the same issue:

• "Use Paragraph format instead of Body Text by default" is unchecked
• A new message starts off in Body Text format
• Beginning of message in in Body Text
• I create a bullet list
• end bullet list (press enter twice)
• the rest of the message is in Paragraph format.

You're right. I had earlier misunderstood. If you wish, you may file a bug report at bugzilla dot org.

I explored a little further.....

If instead of pressing enter twice to end a bulleted list, I press the bullet list icon, Body Text is retained.