To avoid these issues, I personally use a solution not based on pure CSS animations / transitions which I found always have problems. For example, in your CSS implementation, there is a bounce back effect if using the Enter too fast (you can slow the animation down to see it better).

Moreover, new lines handling is different between browsers, some will add <div><br></div>, some versions of IE add only <br>, etc.
I've never been able to fix all these problems or found an implementation fixing all of these so I decided to not modify at all the behavior of the contenteditable, let the browser do is magic which works and instead, react to what's happening.
We don't even have to worry about keys events like Shift + Enter or events like deletion, etc., all of these are natively handled by the navigator.
I choose instead to use 2 elements: one for the actual contenteditable and one for the styling of my contenteditable which will be the one having height animations / transitions based on the actual height of the contenteditable.
To do that, I'm monitoring every events that can change the height of a contenteditable and if the height of my styling element is not the same, I'm animating the styling element.
var kAnimationSpeed = 125;
var kPadding = 10;
$('div[contenteditable]').on('blur keyup paste input', function() {
var styleElement = $(this).prev();
var editorHeight = $(this).height();
var styleElementHeight = styleElement.height();
if (editorHeight !== styleElementHeight - kPadding * 2) {
styleElement.stop().animate({ height: editorHeight + kPadding * 2 }, kAnimationSpeed);
}
});
.autogrowWrapper {
position: relative;
}
.autogrow {
border: 1px solid rgb(0, 0, 0);
height: 40px; /* line-height + 2 * padding */
}
div[contenteditable] {
outline: none;
line-height : 20px;
position: absolute;
top: 10px; /* padding */
left: 10px; /* padding */
right: 10px; /* padding */
}
<script src="https://ajax.googleapis.com/ajax/libs/jquery/2.1.1/jquery.min.js"></script>
<div class="autogrowWrapper">
<div class="autogrow"></div>
<div contenteditable="true"></div>
</div>