Note: Microsoft Exchange actually does "Header Folding" to put newlines in the Subject. We turned on logging and determined that the EmailListener engine code does not appear to be removing the newlines. See here:
So this should be addressed in the engine, or in activity CreateWorkFromEmail, or in fragment WorkFormStandard.
I can definitely say it should not be handled in Email Listener.
Email Listener should be preserving the original email data as much as possible. It should be up to the consumer (Activities, data transforms) or some layer between the Listener and the consumer to deal with possible incompatibilities between the raw data and Pega.