diff --git a/IPython/core/inputsplitter.py b/IPython/core/inputsplitter.py
index 6028266..97c199d 100644
--- a/IPython/core/inputsplitter.py
+++ b/IPython/core/inputsplitter.py
@@ -486,17 +486,19 @@ class IPythonInputSplitter(InputSplitter):
         if physical_line_transforms is not None:
             self.physical_line_transforms = physical_line_transforms
         else:
-            self.physical_line_transforms = [leading_indent(),
+            self.physical_line_transforms = [
+                                             leading_indent(),
                                              classic_prompt(),
                                              ipy_prompt(),
                                              strip_encoding_cookie(),
+                                             cellmagic(end_on_blank_line=line_input_checker),
                                             ]
         
         self.assemble_logical_lines = assemble_logical_lines()
         if logical_line_transforms is not None:
             self.logical_line_transforms = logical_line_transforms
         else:
-            self.logical_line_transforms = [cellmagic(end_on_blank_line=line_input_checker),
+            self.logical_line_transforms = [
                                             help_end(),
                                             escaped_commands(),
                                             assign_from_magic(),
diff --git a/IPython/core/inputtransformer.py b/IPython/core/inputtransformer.py
index 95abe72..1a5f1bb 100644
--- a/IPython/core/inputtransformer.py
+++ b/IPython/core/inputtransformer.py
@@ -227,6 +227,8 @@ def _tr_help(line_info):
 def _tr_magic(line_info):
     "Translate lines escaped with: %"
     tpl = '%sget_ipython().magic(%r)'
+    if line_info.line.startswith(ESC_MAGIC2):
+        return line_info.line
     cmd = ' '.join([line_info.ifun, line_info.the_rest]).strip()
     return tpl % (line_info.pre, cmd)
 
@@ -272,7 +274,8 @@ _help_end_re = re.compile(r"""(%{0,2}
                               [a-zA-Z_*][\w*]*        # Variable name
                               (\.[a-zA-Z_*][\w*]*)*   # .etc.etc
                               )
-                              (\?\??)$                # ? or ??""",
+                              (\?\??)$                # ? or ??
+                              """,
                               re.VERBOSE)
 
 def has_comment(src):
@@ -328,7 +331,14 @@ def cellmagic(end_on_blank_line=False):
     line = ''
     while True:
         line = (yield line)
-        if (not line) or (not line.startswith(ESC_MAGIC2)):
+        # consume leading empty lines
+        while not line:
+            line = (yield line)
+        
+        if not line.startswith(ESC_MAGIC2):
+            # This isn't a cell magic, idle waiting for reset then start over
+            while line is not None:
+                line = (yield line)
             continue
         
         if cellmagic_help_re.match(line):
diff --git a/IPython/core/interactiveshell.py b/IPython/core/interactiveshell.py
index db88ce5..7bc69a7 100644
--- a/IPython/core/interactiveshell.py
+++ b/IPython/core/interactiveshell.py
@@ -1672,7 +1672,13 @@ class InteractiveShell(SingletonConfigurable):
         
         return etype, value, tb
     
-
+    def show_usage_error(self, exc):
+        """Show a short message for UsageErrors
+        
+        These are special exceptions that shouldn't show a traceback.
+        """
+        self.write_err("UsageError: %s" % exc)
+    
     def showtraceback(self,exc_tuple = None,filename=None,tb_offset=None,
                       exception_only=False):
         """Display the exception that just occurred.
@@ -1698,7 +1704,7 @@ class InteractiveShell(SingletonConfigurable):
                 # line, there may be SyntaxError cases with imported code.
                 self.showsyntaxerror(filename)
             elif etype is UsageError:
-                self.write_err("UsageError: %s" % value)
+                self.show_usage_error(value)
             else:
                 if exception_only:
                     stb = ['An exception has occurred, use %tb to see '
diff --git a/IPython/core/tests/test_inputsplitter.py b/IPython/core/tests/test_inputsplitter.py
index e163fb8..9508979 100644
--- a/IPython/core/tests/test_inputsplitter.py
+++ b/IPython/core/tests/test_inputsplitter.py
@@ -446,6 +446,24 @@ class IPythonInputTestCase(InputSplitterTestCase):
                 out = isp.transform_cell(raw)
                 # Match ignoring trailing whitespace
                 self.assertEqual(out.rstrip(), out_t.rstrip())
+    
+    def test_cellmagic_preempt(self):
+        isp = self.isp
+        for raw, name, line, cell in [
+            ("%%cellm a\nIn[1]:", u'cellm', u'a', u'In[1]:'),
+            ("%%cellm \nline\n>>>hi", u'cellm', u'', u'line\n>>>hi'),
+            (">>>%%cellm \nline\n>>>hi", u'cellm', u'', u'line\nhi'),
+            ("%%cellm \n>>>hi", u'cellm', u'', u'hi'),
+            ("%%cellm \nline1\nline2", u'cellm', u'', u'line1\nline2'),
+            ("%%cellm \nline1\\\\\nline2", u'cellm', u'', u'line1\\\\\nline2'),
+        ]:
+            expected = "get_ipython().run_cell_magic(%r, %r, %r)" % (
+                name, line, cell
+            )
+            out = isp.transform_cell(raw)
+            self.assertEqual(out.rstrip(), expected.rstrip())
+        
+        
 
 #-----------------------------------------------------------------------------
 # Main - use as a script, mostly for developer experiments
diff --git a/IPython/core/tests/test_inputtransformer.py b/IPython/core/tests/test_inputtransformer.py
index 373aa5f..56d4c55 100644
--- a/IPython/core/tests/test_inputtransformer.py
+++ b/IPython/core/tests/test_inputtransformer.py
@@ -259,6 +259,9 @@ syntax_ml = \
           (u'hello', None),
           (None , u_fmt("get_ipython().run_cell_magic({u}'bar', {u}'123', {u}'hello')")),
           ],
+         [(u'a=5', 'a=5'),
+          (u'%%cellmagic', '%%cellmagic'),
+          ],
        ],
        
        escaped =