I generally use an empty line between stanzas, rather than have each stanza as a separate paragraph; there are non-html reasons for this, including that there are -- and should be -- sentences that run across stanzas; a stanza in poetry is not the same as a paragraph in prose.

Additionally, capping -- or small capping -- the beginning of each line really went out with WCW, and anymore signals a poem which does not "come after" modernism except in time. In other words, perfectly appropriate for "Twinkle, Twinkle" but not for most poems, and furthermore, arguably for no poems in html (modern technology).

comment to webdesignernotebook -- thanks for these thoughts!