Yes, the instagram hashtags (#) are transformed into Steemit tags but then removed from the post (That's what I thought was best, but I'm no Instagram pro and didn't really know that hashtags are used completely differently than tags on Steemit). I'm gonna change that (let all the hashtags in your post, just transform the first ones into Steemit tags).

And for the line breaks (\n) on Instagram, I will see how they can become line breaks here too. Thanks for reporting this !