Crystal does support RTF however it needs to be fully formed within the first occurance of an RTF entry. In my question it shows two separate COMPLETE RTF entries. As the entries all have the RTF ID tags this will not be possible. The same issue would occur if you copied the above text into a text editor and saved it as RTF. You would only get the first line. This doesnt explain why it works as a parameter and not a formula but its likely how each are evaluated and the later (parameter could loose support in the future).
To Properly pass RTF to crystal you will need to two Rich text box objects. One being a temp box and the other being the builder box and only selecting the formatted text, not the entire RTF content. An example of this can be found at:
http://moneybaron.org/2011/08/23/vb-net-merge-rtf-documents/
Aside from some hacks such as removing the closing brace from the RTF string or rebuilding the RTF table are also avaliable however removing the brace could lead to an unsupported configuration and rebuilding can get messy really quick.
Hope this helps!!