Section 5.1:
If the "reason" string is multiline, than the reason text MUST be
returned as a multiline SMTP/LMTP response, per [SMTP], section
4.2.1.
What should happen for plain old SMTP sessions?
I am not sure I understand the question.
I just read again and although there are clients using HELO and not
understanding multiline responses, RFC 821 already allowed multiline
responses under all circumstances. So forget what I said.
Section 5.1 covers not allowed characters, but should add that it is
an error if messages generated from the response messages would
have lines exceeding 512 bytes in length.
Michael