ImageTTFText works with line-endings.
code:
<?php
header("Content-type: image/png");
$im = imagecreatefrompng("write.png");
$color = imagecolorallocate($im, 0, 0, 0);
$file = fopen("text.txt","r");
$text = fread($file, filesize("text.txt"));
$text2 = str_replace("<br/>", "\n", $text);
$font = "arial.ttf";
//imagestring($im, 2, 150, 60, $text2, $color);
imagettftext($im, 12, 0, 150, 60, $color, $font, $text2);
imagepng($im);
imagedestroy($im);
fclose ($file);
?>
EDIT: Added used code and example
EDIT2: MyBB tags are hard, when you are tired
