Text rendering is much improved in Silverlight 3. Much improved. I do have a bit of a hack to make text look better in Silverlight 2 and also to slim down the stroke weight on knockout text in Silverlight 3.
I noticed in many blog posts that demonstrated rotation in Silverlight that the text looked significantly better in the rotated version (example). So I tried out a few things and found that if you rotate your canvas a very small amount, text looks better with seemingly no adverse effects. This is very similar to the text-shadow trick for doing this in CSS/HTML.
<Grid Background="#333230">
<Grid.RenderTransform>
<RotateTransform Angle="0.00001" />
</Grid.RenderTransform>
<TextBlock Foreground="#CACACA" Text="About RD2, Inc." />
</Grid>
Example

This particular hack improved text rendering regardless of color contrast in Silverlight 2, but thankfully now the only thing it is really needed for is knockout text. Please let me know if you find any issues with this technique.