What are some good applications and tools that graphic designers can use to work with WPF interfaces?
Starting with WPF
Blend is a WYSIWYG front-end for designing XAML-based interfaces for WPF and Silverlight applications, and it's good for templates, visual states, and animation.
If you are working with templates, a nice tool is WPF Theme Editor by DevExpress. It integrates with Blend, and the tree browser and template hierarchy are very useful for locating styles.
One thing you'll always find helpful is access to the actual structural templates for the elements. I usually find myself visiting the DevExpress WPF Controls website, which has a very comprehensive list of libraries and controls.
The Demo Center for DevExpress is also a great downloadable app for extracting and editing templates. I find it particularly useful with complex elements like charts (not included in Blend), where you can toggle the visibility of elements and then move the code to your dev space.
For working with graphics themselves, I found Microsoft Expression Design to be quite good for drawing and exporting vectors into png, WPF or Silverlight formats. It has a nice simple set of tools, and you can import elements from vector. Also, version 4 is free.
I just discovered this nice tool for testing live called Snoop. It's open source, and it allows you to spy/browse the visual tree of a running WPF application (without the need for a debugger), and change properties live.
For all of these you will probably need at least a basic knowledge of how to write/read WPF. I personally use all of the previous and write custom styles for custom elements.