> Nevertheless, -ms is misinterpreting the output of eqn in this > case.
It appears to be intentional. At least in groff's implementation of the ms macros, the first call to a paragraph macro is special, in that it terminates the front matter and begins the body text, and redefines a number of macros in the process, including EQ/EN. (Setting off the equation on a line of its own is the job of the EQ/EN macros, not of eqn.)