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Why specify line height at all? Take those lines out. For that matter, don't specify font, beyond "serif" and "sans-serif."
The hardest mental shift when configuring an ebook (after laying out a printed book) is letting go of specifying how the text will look, and letting the ereader (and the human reader) decide how the text will look. In my ebook HTML, I specify only font sizes, and some people here would argue about even that.
My guess is that Nook is giving the text a line height of 1.0em within the paragraph, and a 1.3em line height between paragraphs, hence the white gap. Deleting the line-height specification from your paragraph style would, I think, fix that.