Beats me. As far as I know, you'd only actually need hard wrapping when you've got two dumb terminals talking to each other with no actual computer between them, like the old mechanical teletypes. If there is a computer, then you can program the computer to do soft wrapping.
If I were to redesign #ASCII today, I'd probably replace the carriage return and line feed codes with line break and paragraph break codes, which behave like HTML <br> and <p> respectively.