Hi, I just made a KDE 3.0.3 patch that fixes virtual wrapping in kedit. The patch, and also a binary .deb for the impatient, are available at:
http://koti.welho.com/jelonen/code/unofficial-debs/kedit-wordwrap/ Choose "Virtual (visible but not saved)" as Word Wrap from options. It replaces the "Let editor width decide" option. - Jarno