Hi- thanks for the quick response.
Per your suggestion, I set 'type'=>'block' in the replaceVariableByHTML options, and all worked as expected.
For the record, I also saw evidence that you can do something similar via embedHTML:
$template->embedHTML("<p>test</p>", array(
'type' => 'block',
'strictWordStyles' => TRUE,
));
}
Thanks for the help!