\newline is effectively gone, and what happens after \\ is also wrong.
I'm not sure, but I think the \parbox examples above show a bug in
`tex--prettify-symbols-compose-p' which should also check if the
character(s) before the currently ignored START is(are) backslashes, and
if yes, how many, and then prettify or not.  AUCTeX has this for this
purpose:

--8<---------------cut here---------------start------------->8---
(defun TeX-escaped-p (&optional pos)
  "Return t if the character at position POS is escaped.
If POS is omitted, examine the character at point.
A character is escaped if it is preceded by an odd number of
escape characters, such as \"\\\" in LaTeX."
  (save-excursion
    (when pos (goto-char pos))
    (not (zerop (mod (skip-chars-backward (regexp-quote TeX-esc)) 2)))))
--8<---------------cut here---------------end--------------->8---

I'm Cc'ing Stefan M. who maintains tex-mode.el.

Best, Arash