During the middle of a maintenance release for MOSS (which by the way is not a easy thing to do), my team was working through a considerable amount of merging source code via TFS from our main source tree to a branch for a patch release. Working with the default Visual Studio merge tool is not the easiest thing to do. For example, if you want to remove a change from the resultant code file that say is 100 lines in a method, the line numbers get messed up and it becomes more difficult to follow along with the change comparison. Its also not that easy to choose which change you want to use when comparing the changes. So I did a brief search and it looks like you can swap in a different (or custom) merge tool that Visual Studio will use when you compare and merge changes. Here is a link I found on configuring Visual Studio to do this (thanks to Vitaly for the excellent content): http://www.vitalygorn.com/blog/post/2007/12/Better-DiffMerge-tool-for-TFS.aspx.
Since one of the diff merge tools listed here is on SourceForge you can look at the source and customize it like you want to so this opens the possibility for making a guided compare/merge tool which can be really helpful for a development team. Nice!