> Unfortunately, I get _two_ open-quote marks on the first paragraph and a
> space between the open-quote mark and the first word of the other
> paragraphs.

This works correctly
for me, using 20120916 23:18 MKIV:

\setupquotation[repeat=yes, middle=“]
\startquotation
    bsdf

    bsdf

    bsdf
\stopquotation

Does it work for you? What version are you using? What code+version
doesn't work for you?
Cheers,
Sietse
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