Judging by that error message, it looks like the variable "=" or one of its dependencies might have been reassigned somewhere along the line. The second argument in that error message indicates that = is getting hold of your read-in data somehow, so it might be something you've defined for processing this data.
The dependencies of = include expand=list, expand=, map, pair, and setforms (among others), so if any of these has been overwritten, it might do something like what you're seeing.
By the way, I think if you're not using Anarki, there's a known bug in (readline ...) where it will spuriously combine each empty line with the following line (https://sites.google.com/site/arclanguagewiki/arc-3_1/known-...). Maybe this could explain the extra \n you're getting.
