Running VS2010 with R# 1641:
The default XML formatting has 'Attributes Format: On Single Line' - this is OK for small numbers of short attributes, but is not great for XAML, because if nothing else, the first element tends to have lots of namespaces, and so turns into a very long line (496 chars on a file I've just run here).
If you set it to 'Each attributre on separate lines' there are at least two problems:
1. This isn't really sensible for XAML either, because you end up with an immensely long file.
2. The default indent option of 'Align by first attribute' is broken, and you actually get all the attributes on the left-hand edge of the page, which is truly awful
Interestingly, you can see this in the preview in the options dialog - set indenting to 'align by first attributre' and then switch 'attributes format' from 'single line' to 'separate lines' - you can see all the attributes on the left-hand edge of the preview. Clicking on 'align by first attribute' (even though it's already selected) makes the preview jump to the correct position, but an actual format of a real file is still broken.
So neither of these options would be any good for XAML, even if they worked properly. Its seems to me that's what's needed is something like the 'scrubber' in kaxaml, where you can set the max number of attributes which can be on one line before they're all put onto separate lines.
I realise I've probably missed the boat for this on R#5, but perhaps the indent bug could be fixed?