I've been using the XML editor from the 'XML Editors and Tools' plugin for Eclipse. As xacro is 'just' XML, it has worked quite well for me.
The plugin can be installed from the 'Install new software...' item under the 'Help' menu. Select the appropriate update site for your Eclipse version ('juno' for me). Now type 'xml editor' in the filter box (above the treeview with plugins). After a short while the 'XML Editors and Tools' plugin should show up. Select, click next and follow the wizard.
Now just make sure to associate the XML editor with xacros by 'Content Type' (this can be done in the Preferences window of Eclipse).