When translating an object with multiple lines of text into MicroStation is there any way of setting the line spacing. Currently it automatically sets to "0"
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I don't honestly see a way of setting line spacing per se. But what you can do is set the x/y/z coordinates of each line of text. The Readers and Writers manual tells you what attributes you need to set (basically igds_text_elements{a}.x, igds_text_elements{a}.y) where a is the line number.
http://docs.safe.com/fme/html/FME_Desktop_Documentation/FME_ReadersWriters/igds/Text_Nodes.htm
Also check out this knowledge centre for articles on the subject, for example:
https://knowledge.safe.com/articles/1539/writing-microstation-dgn-text-nodes-with-fme.html