I think it should work out of the box, no need for a specific macro or manual hack.
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Nick, don't ask me why exactly that is (there are reasons for that, but somewhat deeper than the time I have now allows), but:

<pre>> blah
foo</pre>

Probably yields what you are looking for:

> blah
foo

I don't know if this is redmine mangling textile's @bq.@ tag or earlier redcloth/textile versions behaving that way, but the correct interpretation of:

<pre>> blah
> foo</pre>

Should be:

<pre><code class="html"><blockquote>
<p>
"blah"<br>
"> foo"
</p>
</blockquote></code></pre>

rather than what we are getting now:

<pre><code class="html"><blockquote>
<p>blah
foo</p>
</blockquote></code></pre>

You can try that "on the textile example page":http://www.textism.com/tools/textile/index.php, though the tag for (block)quotes there is not @> @ but @bq. @.
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So there are two problems behind what you say Felix (and what Redcloth implemented maybe) :
# the wysiwyg buttons "quote" and "remove quote" add/remove @>@ signs at the beginning of each line
# when you copy/paste mails, there's a @>@ at the beginning of each line, not just the blockquote. Plus I don't really see how we could have lines quoted multiples times (useful for mails, again) with this syntax

What do you think ?
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Well, the single tag that spans until the end of the current paragraph/the next _pair_ of newlines is consistent with the rest of textile, e.g.:

<pre>h2. some title
spanning 2 lines</pre>

yields a title with a @<br>@ in it spanning 2 lines:

h2. some title
spanning 2 lines

or in html:

<pre><code class="html"><h2>
"some title"
<br>
"spanning 2 lines"
</h2></code></pre>

In this respect, the current blockquote implementation breaks the textile idiom.

As to your questions: I'm not sure textile supports nested blockquotes, but that's probably only because of the use of @bq. @ rather than a "specific" tag like @>@. I think it should be possible to get nested blockquotes with @>@ repetition as it is done for lists (@**@ starts a sublist in another @*@), as to mails: yes, there'd need to be some mangling to remove the extraneous @>@ on all lines past the first one, but that's the price to pay to have _textile_ rather than _mail_ syntax in the wiki fields :-)

(on a side-note: you can't start with a double-nested list item in textile, i.e. @** foo@ on its own on a line will still generate a list of depth 1 instead of 2, but I suppose this is more a safe-guard for lists)
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Come to think of it, @>@ already does everything we "need" except that it doesn't start a new blockquote when hitting a new @>@ and continues the current blockquote instead.
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That's all well and good, for you and I and Jean here to discuss it in the context of a programming condundrum. But I have a dozen new Redmine users looking at it and going "Well that's dumb.", because it is (and i'm certain my users aren't the only ones). Headers make sense that they get a blank line after them. Paragraph tags too. The table syntax, while weird, is still better than MediaWiki's. But the quoting stuff is confusing for reasons passing understanding. I can't tell them to just wrap stuff in @pre@ tags, because then long lines run off the screen and don't wrap, which is confusing as well for somebody not familiar with the problem.

Whether its right or not, in the context of the syntax, its not what people expect. I don't expect being able to paste in random text and have all the formatting preserved, but i DO expect at least the new lines to get preserved, without me having to go massage a giant body of text. @\n\r@ is a @\n\r@, and that is especially true when *quoting*.
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Oh, and as Jean pointed out, the Quote/Unquote buttons in Redmine add a > to the beginning of each line, whether or not they should or not, based on your summation of how things work, further confusing users and the situation.
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Fixed in r5133. Line breaks are now preserved in quoted text.

> the current blockquote implementation breaks the textile idiom

Maybe, but that's not the issue reported here. A nice thing is that it supports block formatting inside quoting:

> Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas sed libero.
> * Donec odio lorem,
> * sagittis ac,
> * malesuada in,
> * adipiscing eu, dolor.
>
> >Nulla varius pulvinar diam. Proin id arcu id lorem scelerisque condimentum. Proin vehicula turpis vitae lacus.
> >Proin a tellus. Nam vel neque.
> >
> >|test|test|
> >|cell|cell|

I doubt that it can be done with pure textile syntax. Please, let me know if I'm wrong.
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