When a moderator reads a report he sees the optional text of the reporter. However, linebreaks entered by the reporter aren't displayed (because HTML eats those as whitespaces). Also, if the text contains links those are not automatically made clickable.

The fix/improvement is easy: in /includes/mcp/mcp_reports.php find:

$message = smiley_text($message);

After, add:

$report['report_text']= make_clickable( bbcode_nl2br( $report['report_text'] ) );