replacing empty line with nothing does not remove empty line

[GoogleCodeExporter]

What steps will reproduce the problem?
1. have text in file of
this

that
2. do a regex replace of ^$ and replace with nothing, a blank replace field

What is the expected output?
this
that

What do you see instead?
gives message indicating that it replaced as requested, but does not remove 
the blank line

What version of the product are you using?
v0.98.6

On what operating system?
XP SP3

Please provide any additional information below.

Original issue reported on code.google.com by lj.h...@gmail.com on 11 May 2010 at 9:56