XAML is an easy thing to edit manually and a lot of you (including me) have been doing this for some time. But now we have a released version of Blend 3 and beta 2 of Visual Studio 2010 is available. So it's a good time to try a "visual" way to edit XAML - the RAD way as we'd call it several years ago :-)
In the 2009.3 release we're introducing the design-time support for AgLayoutControl in Blend 3. Let me describe this support in detail.
First of all we've put the right controls in the right place in the Assets pane:

Then we organized the properties of these controls in the Properties pane (all properties are in the appropriate categories, some are specifically positioned relative to each other to be easier to use, unneeded properties are hidden):

When you drag & drop controls from the Assets pane to the design surface their properties are initialized in such a way that it's easier to start working with them. The following layout was created just by dropping 3 LayoutGroups and 6 LayoutItems on a LayoutControl:

We provide customized context menus in order to make it more convenient to change some properties of our controls and their children:

Now we came to the most important design-time feature - you can finally change the layout of the LayoutControl using drag & drop in the same way you could do it before at runtime (animated GIF):

You can select and drag & drop any control inside LayoutControl, even complex ones which have their own children. For example, you can select a FlowLayoutControl inside a LayoutControl using its entire area, including its children.
You can press the Esc key to select a parent control of the selected LayoutControl's child. The 0..9 keys can be used to change the ItemSpace property of the selected LayoutGroup and the arrow keys can be used to change its Padding property.
All this functionality is available because, by default, LayoutControl is in customization mode at design-time. If, for some reason, you want to turn this mode off, you can do it via the LayoutControl's context menu shown at the "Objects and Timeline" pane or on the design surface of Blend 3.
In the 2009.3 release we've made sure you can restyle any element of any control in AgLayoutControl suite. Please take a look at the styling properties available for each control in the Properties pane (Miscellaneous category) or Object submenu of the Blend's main menu (Edit Additional Styles/Edit Additional Templates submenus). Note that Blend 3 does not allow you to restyle Panel-based controls (which layout controls are) through the context menu. For example, take a look at the styling properties available for LayoutControl:

We are working on the same level of design-time support in Visual Studio 2010. It will become available in the release build of 2009.3 or in one of its minor updates.
Please try this new design-time support for AgLayoutControl in Blend 3 and tell us what you think.