In zmud, will doing this durastically reduce my speed?:

Instead of using spaces, in warrior affs, using {$^| }, so that it can either be a space or a newline.

Anyone know?

it depends how often you use it. If you use it every space, it probably will.

I'm experimenting with regular expressions containing (?: |\\n)+ where a space and/or newline may appear. The trick is to create a second state with a very brief wait to keep it from firing a dozen times and force it to reset itself.