I'd like it if you could customize the game further, like a new menu setting "custom game" where you had more options relating to toggling vests, toggling rare weapons, disabling tanks/jeeps/apcs, decreasing RP rate, etc. Would make the game better.

I don't think it'll go that far what you described, implementing a UI to edit every possible setting out there for every possible faction would be just too much deviation from the stuff that absolutely needs to be done inside RWR. Anyhow, there will be some new options in-game once I'm done with the upgrade to be able to select the factions in the single map match you might be generating, that's the first one of them. These options should be enough for most RWR players, but power-players obviously want to go overboard with this stuff.

For this reason, there will also be "advanced"-tab or field, that'll allow you to load the settings from a bunch of files, which should basically allow you to cover every possible initial scenario the game supports. This isn't that far from actually loading the configs and settings as a mod, which you can already do in 0.88.

Actually, come to think of it, it is possible to create a completely separate application to do the things you said, select stuff that is enabled from a set of available options, set all the parameters and so on, and it's open for anyone to do! This application would output a mod based on the user settings, right? It could also tamper with RWR settings.xml to enable the mod on all maps, for example. There could be a button to launch RWR too, so there you'd have it.

To modify most of the resource enabling, you'd modify map_config.xml:

Most of the current map_config.xmls look exactly same, but basically they could be different if we wanted to make only certain stuff available for some specific map; instead of saying <weapon file="all_weapons.xml"/> here we could list each weapon we want to enable here, in similar manner they are listed inside all_weapons.xml.

There are things you can't put into a mod (yet) as these things are largely meant to be dynamic settings possible to control from a script running beside RWR, but you can use this handy tool to easily send those commands to the game from command line while the game is running: viewtopic.php?f=7&t=1179

(The fancy add-on application could do this too automatically! )

You could craft new stuff up from these two commands alone, most of the others are meant for objective tracking, rewarding, server and player settings handling.

I'm not an expert on XML, but to my understanding, it might be possible to create such a "mod editor" by declaring an XML Schema that holds the possible values and ranges and max counts for various things found in map_config.xml and any other XML needed for this, including the commands, especially the start_game one, and get these files loaded in some fancy XML editor that could represent everything close to a UI with checkboxes, radio-buttons and dropdown-lists. Saving the files in the editor would mean the mod gets updated, and by reloading it in RWR the settings would take place, right?

If one would declare even the weapon, grenade, call, vehicle and item XML schemas, the resource setup could go as far as tweaking every external parameter. Here's the funny part: if all the changed parameters would be present in the resulting map_config.xml file, clients joining a server/game with such map_config.xml would work correctly without downloading the mod in 0.89.

I have no idea if this is possible or this easy, just throwing an idea out there.

Any XML experts out there to say how it is?

I just skimmed trough this and what Pasik is describing sounds to me like a "mod manager" of sorts.
Should be completely possible and depending on how fancy you would want the interface not really too hard either.

What I would imagine it could do is:
Present a list of all available mods/maps/things (and perhaps even individual parts of the mods, like specific weapons in the mods) in the media folder
(Perhaps also a list of metagame settings?)
Allow you to make a selection of what you want from this list
Compile the neccesary xml files to run the selection
"Tamper" with settings.xml
Run the game and metagame scripts

Sounds like it would take some time to write this though. That's a lot of stuff to gather and present in a useful way.