That said, I agree that it would be better if it isn't a thousand lines, and maybe there are better options than XML.
The company I work for is a Microsoft shop (for now, switching to Java sadly), and I've edited a lot of web.configs in servers, sometimes using Notepad, and it wasn't much of a hassle (though I did have to research what to edit beforehand in some cases).
Yes, because the registry is terrible. If the registry were any good, IIS configuration would use it, and you'd be able to programmatically reconfigure IIS, or any other program, in a standard registry-based way.