This neat little project template enables you to create Silverlight applications from Visual Studio 2005. It integrates fully with Visual Studio 2005, and only asks once for the Silverlight installation path before it happily creates projects for you.
Debugging Silverlight projects is not possible, and IntelliSense support is limited, but you are able to create Silverlight assemblies, and do not have to wait for Visual Studio 2008.
Grab the installer here. The latest version is 0.3.1.