I used the most recent IL gameserver in http://l2jserver.com/svn to test. Credit should mainly go to HanWik-X, he realized that he needed to use \\\\n so that Java would replace it properly.

\java\net\sf\l2j\gameserver\clientpackets\Say2.java

Original code:

    protected void readImpl()
    {
        _text = readS();
        try
        {
            _type = readD();
        }
        catch (BufferUnderflowException e)
        {
            _type = CHAT_NAMES.length;
        }
        _target = (_type == TELL) ? readS() : null;
    }


Edited Code:

    protected void readImpl()
    {
        _text = readS();
        _text = _text.replaceAll("\\\\n","");
        try
        {
            _type = readD();
        }
        catch (BufferUnderflowException e)
        {
            _type = CHAT_NAMES.length;
        }
        _target = (_type == TELL) ? readS() : null;
    }

This should remove any occurances of \n entirely, but you could also just filter it to something else:

_text = _text.replaceAll("\\\\n","-_-");

Attached my Say2.java but you may be using a different version :x