When I do version control on text (or latex) files I often run into the problem that the merge/diff tools are all line based while text files are not. This leads to insufficient granularity: every paragraph with the slightest change marked as different or, with hard wrap, every line after reflow of paragraph marked as different.
Are there any tools specifically for comparing/merging text files which avoid this problem? Ideally, this would let me revert at a sentence or sub-sentence granularity level and intelligently group changes.
I'm aware that latex-diff exists and that may be great for visualizing changes. I want a tool that works on the source.
EDIT: Since all the merge programs seem to be line based (wdiff is nice but without line numbers and merge functionality not appropriate) a stopgap solution would be a merge program that made it easy to select part of a line to revert (or even made it easy to just jump in and edit the line by hand during the merge). I'm currently using Filemerge on os x which doesn't seem to allow this (ideally it would be GUI as I don't use it enough to warrant memorizing keystrokes).
Still I would prefer something specifically designed to allow this. I wouldn't think it would be that hard.