www.wysiwygwebbuilder.com

I don't know if this is by design or not, but selecting a paragraph of text and setting a specific line spacing for it ("right-click / Line Spacing") disconnects all of the text from its original style settings.

i.e. If my paragraph contained text with my 'Normal' and 'Code' styles, adjusting the line height for it will result in WYSIWYG Web Builder thinking that the text has no applied styles.

I only found this out by accident when I tried to change a style used throughout the web site, only to find that a large number of paragraphs did not change accordingly, because they had a modified line spacing.

That's not how I would have expected it to work.
Is this by design?

Also, changing a style does not seem to have an immediate effect. I have to 'select' then 'unselect' the text again (on each open tab) before it is updated.

This is normal behavior.
You either set the formatting by using a (global) style or by apply the formatting directly to the text.
If you change one of the style attributes (like line spacing, font, bold etc) then the global style will be removed from the text, because it cannot be active at the same time.

Note that this is not directly related to WWB. The text editor is standard Windows functionality. The same as used by WordPad.