See my document at http://dl.dropbox.com/u/63253361/wrap.odt
The text that is just on the page is wrapping around the golden line; but the text that is in a frame (very faint grey background) is not.
Thanks!
Bob
AFAIK text in frames does not wrap in LibreOffice, so no, it can not.
As far as I can see, the problem is that the line AND the text box are elements added in one or two layers into the page.
You might be able to do it if you use a section to replace the text box. AFAIK you can set margins for each section separately.
If you like, try this idea. If you like to have more help, please report what exactly you did and what the result was.