Your recommender can do whatever he wants that's appropriate for the letter. I mean it's not like a recommendation letter needs to adhere to specific MLA format. Indent when he needs to indent, double space it if you want to fill up a page.
Okay first of all, it doesn't really matter. This is the real world, where you can do whatever you want within the law if there are no clear guidelines.
Second, they should know how to do it because they're an adult.
Third, you don't need to worry about it because it's their letter, not yours. If they mess up, it won't be held against you.
I think, personally, it's easier to read if paragraphs are single-spaced justified and separated by double space. Business letter format essentially. But it definitely is personal preference.
