The code sets the LaserWriter to 10 CPI, but because the Super Serial Card firmware includes a Line Feed as it picks up the CTRL-M, it adds a line feed to each line: single space text comes out double spaced, double space triple spaced, etc, making single spacing in 10 characters per inch impossible.
In order to fix this problem, tell AppleWorks to insert the linefeeds and configure the serial card NOT to add linefeeds by setting swtich SW2-5 to OFF. For the built-in serial port in an Apple IIGS, use the Control Panel; for the printer port of the Apple IIc, use the Apple IIc System Utilities. AppleWorks will be smart enough not to insert linefeeds after any carriage returns in the printer codes.