What you are asking for is format=flowed support in the Evolution composer. (Evolution supports READING such messages, but doesn’t allow CREATING them.) Preformat is working as it is supposed to — for example, people pasting source code into an email message need to make sure that lines don’t wrap.

However, you are right. This is a nice option for some people who don’t want to be limited to 70 column text, but don’t want to worry about horizontal scroll bars. A discussion of the feature is here:
(Dan’s Mail Format Site | Body | Line Length)
http://mailformat.dan.info/body/linelength.html

There is a (very old) bug requesting this feature in Evolution. It isn’t very popular at the moment:
(Bug 200423 – flowed text support)
http://bugzilla.gnome.org/show_bug.cgi?id=200423

Not only the issue you decribe here, but if you select “Preformat”, you get no word wrap at all, even at the right window border! So if you reach the right border, the whole text will scroll leftward and, back at the beginning of the next line, your long lines will reach over the right border.

That’s not acceptable at all.