I found the freaking culprit!
I had enabled Post excerpts in emails
The description is
In notification emails, always send excerpts instead of full posts
But that’s not quite correct.
- It applies to ALL emails, not just notifications.
- An excerpt is a small portion, there is no need to strip formatting just because it’s not the entire message.
In my mind, a reply received via e-mail isn’t a notification, it’s a reply. A notification is, “Hey user X just @mentioned you.”
I’m just glad I can now move forward with out new ticketing system. I hope this helps someone else. And maybe the team can either fix that setting, or at least clarify the description.