Italics and Double Spaces

Liam was writing this:
"The story Cinderella [sic] was a great story."
We talked about the right punctuation for Cinderella. Callum and Dylan both quickly said that it deserved double quotation marks.

Callum said that if it's a short story, it's in quotes, but if it's a book or novel, it's italicized or underlined. Dylan concurred.

My first inclination was that it was italicized, probably because of the influence of Strunk & White's Manual of Style, which says:

American printed matter uses italics (the type fonts whose letters slant to the right) for the titles of literary and other artistic works (War and Peace, Verdi’s Requiem); for the names of journals and newspapers (The New York Times, Newsweek); for words, letters, and numbers cited as words, letters, and numbers (as here with the word italics); for foreign words and phrases (ars longa, vita brevis est), although when these loan words and phrases have been fully assimilated into English, we usually cease to italicize them, as with à la mode; for the names of ships (Queen Elizabeth II, or Q.E. II); and for a number of other technical purposes such as are usually specified in a publisher’s stylebook. In handwriting or typescript, underline what you wish to italicize. Italics are also used for emphasis and to indicate a heavier-than-normal stress on a word, particularly in Semiformal and Informal writing, although most editors discourage the practice. To achieve the effect of italics in the midst of a full sentence already in italics, put the word to be stressed in roman: We thought she’d never leave!

Now, in our other recent punctuation discussion, I was proved to be an old fuddy-duddy, as I nearly always put two spaces after each sentence. Yes two. One looks just too cramped for my taste. Extra whitespace is a good thing, especially when you aren't killing trees to show it. I'm pretty sure that this is most common in U.S. business English and the emails and documents I read everyday. The single space was proved to be OK and seemingly preferred nowadays. I still think it's only because HTML will turn two spaces into one and you need to add an '& nbsp ;' - called a Non-Breakable Space, but take out the spaces in this post since I put them in order for it to show up - to get the extra space to show up on a web page.