Microsoft's XML Team have released some screen casts showing off new features of the XML tools. It looks cool, and if I was a Windows/Visual Studio type I'd probably use it - but Oxygen and RELAX NG really fit like a glove for the sorts of things I do. The schema-based 'tabbing' feature in the XML Editor component looks really amazing though - you just type in an element name, hit 'tab' and it'll fill in all the required elements and attributes and just tab through the fields. Because it's validating against a schema, it knows what should go where. That's really, utterly cool. Apparently, this is available in Oxygen, but I've no idea how to get it to work. 
Other things that are cool? For XSLT, the fact that you can use breakpoints in source documents, and you can check values of variables at breakpoints. In the XSLT mode, it also uses Internet Explorer to render HTML (oh, the irony - IE doesn't actually support XHTML properly, but you can use Visual Studio to do transforms to it!).
In the XSD demo, the 'find most likely root elements' function is very cool too. It looks like desktop tools in the XML space are finally reaching a very mature level.
