MarkRH on "V1.4.6: Where does it read and save IPTC information?"

I found it. It's in \zp-core\class-image.php. Now I can do what I want. Actually, just needed to 1 line of code to convert newlines to HTML breaks:

/* iptc description */
      $desc = $this->get('IPTCImageCaption');
      if (!empty($desc)) {
         // mrh add code to add line breaks.
         $desc = nl2br($desc);
         $this->setDesc($desc);
      }