while you can specify that a substitution take place on many lines (1,3s/// for lines 1-3, .,$s/// for lines "here" to end of file, or %s/// for lines "all") VI is based on EX which is a line editor.
there may be some advanced voodoo mumbo-jumbo that will allow VIM (or ELVIS, another enhanced VI) to munge the double \n\n the way you want it to... but there's probably a better tool. try "man wml" for example ("apt-get install wml" if you don't have it)... just one suggestion, there are plenty of others (including perl and/or xml)...