Or, to be more clear, how can I format a block of text (in my case, to be included within a tooltip) such that some portions of the text come from bound values.
In p
As far as I know, WPF doesn't do what you want. You do have a much more powerful (albeit more involved) solution.
Take a look at the IValueConverter interface.
MSDN HowTo link here
EDIT
Based on aku's answer, and your assertion that you can't use 3.5 SP1, here's an alternative.
Take a look at Phil Haack's recent series of posts on string formatting:
Create a ValueConverter as that takes the format as a property. You should then be able to bind your data object and have it format based on your defined format (using property name instead of position).