Yes ; it does line breaks by having \r or \n (13 or 10) in the code. The new branch allows you to control the justification as well.
Much clearer too ; the previous one suffers from being experimental and expanded - the newer one is much more robust, and it also decorates a group to get its functionality, so it behaves almost exactly as a group does (the one difference is that it has a runtime listener to do the animation if you turn the animation on).
The control system is only for tinting (e.g. {red} is red {1,0,0} is also red. I’m a bit puzzled by the {shake} {fast} {slow} thing - do you mean you want to be able to specify these things purely in text for the whole thing or that you want different effects and speeds at different points in the string ?
e.g.
This {shake}{fast} shakes {off} this {wobble}{slow} wobbles {off}
This is a bit more complicated, not much but a bit. Bit like extending the tints so you could change them in code.
Really depends how much flexibility you want, writing something so you could do
{shake}this shakes
and the whole thing shakes via some sort of scheme like
BitmapString:addInlineCommand("shake",function(bitmapString) bitmapString:setModifier(\<some such\>) end)
is much easier but this would apply shake to the whole thing, it would be a way of putting API calls into the string.
TBH I didn’t perceive it as for anything much more than some pretty text displays for scores, HUDs, title pages, high score tables and so on. Bit like the old Amiga demos. I do sometimes think the functionality is a bit excessive anyway, it can do some eye-exploding things 
The other thing would be to subclass the BitmapString;setText() method so that it extracted the various requirements and write a modifier that worked on that data.
Basically - there is a group containing the bitmap characters - this is mirrored in classes for the strings and characters. The basic implementation just allows ordinary text, any size, static, basic tinting. But the modifiers allow you to butcher the scaling/position/rotating/tinting of each character on the fly