Indeed, it belongs more to the bug database (in Contribute) although, if I believe the message at AutoFormat Fails, fry already knows the failures of this feature (and I recall having seen a report similar to your).

PDE's editor is quite primitive, good enough for quick coding but a bit "light" on features. When I write long code, I use instead my favorite text editor, but then I have to reload the sketch in PDE before each test (quickest way is by using the toolbar button).

My favorite editor is SciTE, an open source multi-platform editor, but it can be whatever you like.
Alas, PDE doesn't have auto-detection of file change like SciTE or Eclipse have, so I have to refresh the script in PDE by clicking on the Open button of the toolbar (up arrow) and choosing the current sketch. Advantage over File > Sketchbook (for example): it opens in current window.

Ah, I never asked myself the question, as I compile SciTE and Scintilla myself... I contributed a bit to its coding, that's why I like it (if something isn't right, I try and correct it!).

I don't know which platform you use, I will assume it is Windows. If you want to try SciTE, I would recommend Sc1, second link in the Windows Executables section. It is a standalone exe, simple to use.
Changing settings can be daunting for the newcomer, as it implies changing a text file (.properties).

If you want a more "friendly" editor, with familiar setting dialogs, perhaps you want to try Notepad++, or even Notepad2.
Both are based on Scintilla, the same source code editor component behind SciTE, and are perhaps a bit less flexible but simpler to use. Notepad2 is designed to be simple and small, a replacement of Notepad as the name implies. Notepad++ have some bonus features, like the TextFX menu, macros, plugins. Its "Indent C++ code" even work decently on simple Processing code, the languages being close enough.

No editor will compile/run code like PDE does, although now that Processing has command line interface (I think) you can issue such commands at least with SciTE and Notepad++.

Of course, all these editors are free, so they costs only the time to download and try them.