+100 for Ralf Koban's comment. We tried it and it works great. Resolves csproj file 99% of the time without conflicts.

You can use external parsers for that (I've written some):

.csproj, .sqlproj, .vbproj, .xml:
https://github.com/RalfKoban/xml-semantic-external-parser

Maybe that can help you on merging.

I think full XML with extensions to support .??proj files would be the best solution (i.e. relax ordering in some cases, enforce in others, etc.) We'd probably want to track ordering changing in XML in any case and make the decision based on the type of file if it was important or not.

@Jason, what if we just added some options to the XML merger, like, don't care about item order, etc?

Grouping, I think, is pretty complex.

Merging project files using XML semantics only would be insufficient. For example:
* Order of Items is unimportant.
* Order of Properties can be important.
* Grouping child elements into ItemGroups and PropertyGroups without Conditions is unimportant.

If we can semantically merge XML, then we can handle project files. :-)