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I think I know what you mean. I try to wrap at 80 col. and I often need to go back and edit a paragraph, which breaks all my wrapping.

Have you tried soft line wrapping in GNU nano (M-S)? As long as you're running nano in an 80 column wide window, that should work fine.

BBEdit might be just right for you.

My apologies, I was specifically referring to text-based/console-based applications. All the GUI text editors seem to wrap and unwrap just fine.

Not exactly a word processor but it seems to me like you could try (if you can find it) the TSE or QEdit:

what Qedit (often renamed simply to Q.exe) was capable of doing in the (good) old times was incredible.