A patch has been made available for the Longhorn SDK and Visual Studio "Whidbey" releases distributed at the PDC; it fixes a number of issues with editing XAML files. They warned about some of these problems at the PDC: many times you'd create something that was perfectly valid XAML but still had red squiggly lines underneath indicating a problem. This was due to changes in XAML close to the preview release shipping; it looks like the IntelliSense schema has now been updated to support this. Get the patch here.

Thanks to Mike Gunderloy for the link - if you don't read it, his Daily Grind is one of the best sources of information available on what's new for .NET developers out on the net. Highly recommended.