edit I had assumed that George wanted to get rid of formatting in IMs, transforming "Hello World" to "Hello World" but I had misunderstood. The issue is getting rid of the HTML when the IM is "<i>Hello</i> World." I would remove my answer, but I'm concerned that someone else will misunderstand it too, so I thought I'd try to help explain.
Tools > Preferences > Conversations has an option to display your current IMs in plain text. Uncheck the option "Show formatting on incoming messages."
If you want to make your logged IMs consistent with this, go to the Logging tab and choose "Plain text" for the log format.
I just confirmed these options for Pidgin 2.5.6 on Windows, but I think they're pretty consistently available.