Visual Studio 2008 and XML Tools
Sure - it's a little late in coming, but still feels good to say that Visual Studio 2008 has shipped! You can try the 90-day trial versions or the FREE Express Editions of Visual Studio 2008 right now and get started.
A couple of my favorite features are the automatic XSD generation from XML files which allows you to have validation and intellisense on any XML file you are working with and the ability to set breakpoints in the input XML files that an XSLT is actually transforming.
A great way to get introduced to the XML / XSLT tools in VS 2008 is through this article by Stan Kitsis in this special issue of the CoDe Focus Magazine which is dedicated to Data Programmability technologies:
There is another interesting article in an earlier issue written by Chris Lovett (creator of the immensely popular free tool XML Notepad 2007) which provides a much more detailed view of how the XML Editor is evolving into a platform which other tools and designers can use to work with XML documents: