Your comments

I can only guess, but maybe Unicode characters are encoded differently than in the original file when Textastic saves them?

Also, Textastic changes all line breaks to be the same when it saves a file. Since in your case the result is CRLF (2 bytes) instead of LF or CR (1 byte), this could only result in a bigger, not a smaller file though.

To be sure, you would have to run the file through a diff program.
This looks like a network problem. Is there maybe a firewall preventing FTP network traffic? Can you try to use a different Wifi network?
You can use the Recent Files list in Textastic to open recently opened external files. Different sorting of the file picker list would have to be implemented in the Working Copy file picker extension, not in Textastic.
The actual problem is that it takes a while to re-layout the file if you have auto line break enabled.

If you encounter this problem often, you might try to disable auto-line breaks in settings and set a manual line break column. Set it to a high value like 1000 to effectively disable line breaks.
The "Debug Log" setting logs client-side connections details including server answers and error codes. The log file is saved in Textastic under "Local Files" in the "logs" directory.

If you do indeed get a "login denied" error as this feedback topic suggests, then it means almost certainly that either the user name or password is wrong. The "login denied" error is displayed only if the server you are trying to connect to sends this error code.
I did use SSH tunnels in the past, so I do know what they are. I thought that you maybe just meant git over ssh, sorry for the misunderstanding.