Hi everyone,
I thought this was addressed in #2797, but it didn't. It might be a duplicate of #174.
In short, copying + pasting is very weird with newlines. In some cases, it seems to copy only some of them:

But using clear in the WSL seems to reliably and effectively completely break copying.

It doesn't copy any whitespaces, instead, it copies the buffer as-is.
The same effect seems to occur with PowerShell. Here without a clear beforehand:

And here with a clear beforehand:

The selected console is a standard WSL Ubuntu, as detected by the terminal:
{
"guid": "{2c4de342-38b7-51cf-b940-2309a097f518}",
"hidden": false,
"name": "Ubuntu",
"source": "Windows.Terminal.Wsl"
}
If it's a powershell, it's similar:
{
// Make changes here to the powershell.exe profile
"guid": "{61c54bbd-c2c6-5271-96e7-009a87ff44bf}",
"name": "Windows PowerShell",
"commandline": "powershell.exe",
"hidden": false
},
Nothing in the config has been changed, besides adding two (unrelated) profiles. In the screenshot, the Windows Terminal was freshly opened.
Version information of Windows Terminal:
Windows Terminal (Preview)
Version: 0.5.2681.0
System + Build Info:

If I can help with providing anything else, please do ask.
Since I wanted to be a bit proactive, here is a small workaround I've written: https://github.com/moritzuehling/WindowsTerminalClipboardFixup
Seems to be fixed in the newest version, closing! Thank you for fixing it ♥