It would be great to have XAML support.
There's a few common formatting changes that can be made to XAML documents without affecting the semantics but that do affect traditional merge tools quite badly. It would be great not to have to deal with those by hand.
The most common changes are probably reordering element attributes, and moving attributes onto separate lines vs. having > 1 attribute on the same line.
There is then the equivalent issue to what you have been talking about already: re-ordering and re-arranging elements in the file. Note that XAML has an extra way of associating the elements in two versions of a file in the "x:Uid" attribute, which is used for maintaining localisation in the face of file re-ordering.
Don't you think the XML merge from Altova is good enough for this purpose?? http://www.altova.com/diffdog.html