The sad part is it's not even just Notepad. It's the underlying "EDIT" HWND class itself. So anyone coding in raw Win32 APIs has to basically capture paste events from the clipboard to transform text into the "\r\n" state, and upon reading text out of it, potentially convert it back to "\n".
Probably a five-line patch to that class would eliminate so much extra work for developers. And we could drop the whole ridiculous "text mode" for working with files while we were at it.
Plus I'm sure there must have been thousands upon thousands of external requests to Microsoft to be able to use Notepad with all their non-Notepad text/configuration files over the years.
It's hard to believe this is anything but very deliberate at this point. Add to this, the mess Microsoft perpetuates with not supporting UTF-8 (std::wstring, wchar_t, _wfopen, non-standard iostream extensions for Unicode filenames, etc), and one really begins to have a deep seething hatred for Microsoft.