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Is there a way to have custom field Post Help text HTML formatted? Not even new lines are recognised and it makes the help text very difficult to read.
I'm afraid the answer is "no you can't configure that to allow HTML tags". If you need lots of Help text put most of that into the 'Body' on the Event Info and/or Event Register and/or Contribution pages - keeping the help text nice and short.
If you're talking about a field on a public-facing profile, you can add a profile "field" of type "Formatting", which can be HTML-formatted. See screenshot.
If you ARE committed to hacking this, I'd do so by inserting a jQuery script into an .extra.tpl file.
Required, but never shown