This is me thinking out loud, but hopefully it'll help in some way.
You would need the following objects...
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'Display' String/Textbox
'Token' String
'Full Text' String
'Size Limit' variable
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Alright, once you have your full text entered, you break it up into tokens using the Split function (IE: in "I want a ham sandwich, dadgum it!", tokens would be "I", "want", "a", "ham", "sandwich,", "dadgum", and "it!" as they're all separated by white space).
Next, you loop through token by token and add the length of the Display string to the length of the token. If the sum is less than 'Size Limit', then add that token to the display string using the Type Writer effects. (IE: length of 'I' is 1 and length of Display is 0, so add 'I' to Display. Next, length of 'want' is 4 and length of Display is 1, so add 'want' to Display. And so on...)
If length of Token + length of Display is greater than 'Size Limit', then add a newline to Display (putting you on the next line down), add the line width to Size Limit (IE: If you're restricting it to 30 characters per line, add another 30 to Size Limit), and add the token to Display; it should now be on the next row.
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Hope that helps. Let me know if I need to explain more clearly, or if MMF2 doesn't have all those abilities.