I don't think it's that black and white? Google Docs, for example, lets you individually review and accept/deny/revise each individual suggested change. It's not a 3-way merge like programmers are used to seeing, but it's the same idea... you start with an original, see someone else's changes, and decide which to keep, or you can take their changes and further edit. And comment in-line too.

I've never used a lawyer's diff tool, but my IDE (IntelliJ) ignores whitespace and lines.

> There are diff tools, though, targeted at lawyers for legal work: "show me the differences between these two contracts" ...

Do you have some examples from the top of your head?

Comparing the content of PDF files would be awesome, and I don't mean comparing graphically but textually.