I had this exact problem a few months back.
For me, outliners were initially not important. So I decided to go ahead and use LINQ to pare down the list. It should be easy enough to provide a .Where(...) clause, or use lambdas, to select a subset of the list - every N entries, or every-other entry in the list.
yourSeries.ItemsSource = blah.Where(x => x... /* insert expressions here to filter a little */)
If outliners are important, you may need to write a simple algorithm that filters your list's view down somewhat.
Here's some simple code (not pretty however) that I had to write for a graph. Sorry for not simplifying the code much, comment if you need detail, or the data object.
I was measuring the size of control assemblies over time, and correlating that with build dates/times/and check-ins.
For this app, I wanted to show changes in the data, as I had many redundant points. Those were the inflection points of interest.
Imagine having 800 builds, and related data - but really only say 300 interesting data points. That's a lot less data, and improves the display.
I explain the code a little below.
        private void ParseData(string xml)
        {
        XDocument data = XDocument.Parse(xml);
        _data = new Dictionary<string, List<ControlAssembly>>();
        foreach (XElement dataSet in data.Descendants("data"))
        {
            string set = dataSet.Attribute("set").Value;
            long lastSize = 0;
            int matchingSizeCount = 0;
            foreach (XElement build in dataSet.Descendants("build"))
            {
                ControlAssembly ca = ControlAssembly.Parse(build);
                if (ca != null)
                {
                    List<ControlAssembly> list;
                    if (!_data.TryGetValue(set, out list))
                    {
                        _data[set] = new List<ControlAssembly>();
                        list = _data[set];
                    }
                    bool add = true;
                    if (ca.SizeInKilobytes == lastSize)
                    {
                        matchingSizeCount++;
                        if (matchingSizeCount > 1 && !ca.IsKnownReleaseWeek)
                        {
                            // cut down on the displayed data points
                            add = false;
                        }
                    }
                    else
                    {
                        matchingSizeCount = 0;
                        lastSize = ca.SizeInKilobytes;
                    }
                    if (add)
                    {
                        _data[set].Add(ca);
                    }
                }
            }
        }
    }
The _data is my set of data for assemblies, which I eventually use to setup the series:
        ParseData(SampleData.LargeDataSet);
        _xapSeries = new Dictionary<string, LineSeries>();
        foreach (string assembly in _data.Keys)
        {
            LineSeries series = new LineSeries();
            series.Title = assembly.Replace(".dll", "");
            series.IndependentValueBinding = new Binding("BuildDateTime");
            series.DependentValueBinding = new Binding("CompressedSize");
            series.MarkerHeight = 12;
            series.MarkerWidth = 12;
            series.ItemsSource = _data[assembly].ToList();
            _xapSeries[assembly] = series;
            if (assembly != "Total")
            {
                CompressedSizes.Series.Add(series);
            }
        }
And, finally, if you do want to customize DataPoint templates, it can be done, but it is not trivial in my opinion.
You have a lot to do, such as
- Defining the proper type of point (I'm using LineDataPoints here)
 
- Setup the style palette to select from your point styles, which include that custom template
 
This is a positive if you need to do a lot of customizing. You could, for instance, make the entire data point transparent.
Here is a custom template (sorry, very verbose) for a LineDataPoint (Silverlight Toolkit chart controls) that has a custom ToolTip binding, a bound color for the point, and other properties that relate back to the same data point from the filter code above.
I removed the visual states from this XAML to clean it up
        <ControlTemplate x:Key="CustomLineDataPointTemplate" TargetType="charting:LineDataPoint">
        <Grid x:Name="Root" Opacity="0" ToolTipService.ToolTip="{Binding DataPointTooltipText}">
            <Ellipse Opacity="0.4" Stroke="{TemplateBinding BorderBrush}" Fill="{TemplateBinding Background}"/>
            <Ellipse Opacity="0.4" RenderTransformOrigin="0.661,0.321">
                <Ellipse.Fill>
                    <RadialGradientBrush GradientOrigin="0.681,0.308">
                        <GradientStop Color="#00FFFFFF"/>
                        <GradientStop Color="#FF3D3A3A" Offset="1"/>
                    </RadialGradientBrush>
                </Ellipse.Fill>
            </Ellipse>
            <Ellipse StrokeThickness="2" Stroke="{Binding DataPointBrush}" />
            <Ellipse x:Name="SelectionHighlight" Opacity="0" Fill="Red"/>
            <Ellipse x:Name="MouseOverHighlight" Opacity="0" Fill="White"/>
        </Grid>
    </ControlTemplate>
The custom style palette that will use these:
        <datavis:StylePalette x:Key="MyCustomStylePalette">
        <!--Blue-->
        <Style TargetType="charting:LineDataPoint">
            <Setter Property="Background"><Setter.Value><RadialGradientBrush><RadialGradientBrush.RelativeTransform><TransformGroup><ScaleTransform CenterX="0.5" CenterY="0.5" ScaleX="2.09" ScaleY="1.819"/><TranslateTransform X="-0.425" Y="-0.486"/></TransformGroup></RadialGradientBrush.RelativeTransform><GradientStop Color="#FFB9D6F7"/><GradientStop Color="#FF284B70" Offset="1"/></RadialGradientBrush></Setter.Value></Setter>
            <Setter Property="Template" Value="{StaticResource CustomLineDataPointTemplate}" />
        </Style>
        <!--Red-->
        <Style TargetType="charting:LineDataPoint">
            <Setter Property="Background"><Setter.Value><RadialGradientBrush><RadialGradientBrush.RelativeTransform><TransformGroup><ScaleTransform CenterX="0.5" CenterY="0.5" ScaleX="2.09" ScaleY="1.819"/><TranslateTransform X="-0.425" Y="-0.486"/></TransformGroup></RadialGradientBrush.RelativeTransform><GradientStop Color="#FFFBB7B5"/><GradientStop Color="#FF702828" Offset="1"/></RadialGradientBrush></Setter.Value></Setter>
            <Setter Property="Template" Value="{StaticResource CustomLineDataPointTemplate}" />
        </Style>
        <!-- Light Green -->
        <Style TargetType="Control">
            <Setter Property="Background"><Setter.Value><RadialGradientBrush><RadialGradientBrush.RelativeTransform><TransformGroup><ScaleTransform CenterX="0.5" CenterY="0.5" ScaleX="2.09" ScaleY="1.819"/><TranslateTransform X="-0.425" Y="-0.486"/></TransformGroup></RadialGradientBrush.RelativeTransform><GradientStop Color="#FFB8C0AC"/><GradientStop Color="#FF5F7143" Offset="1"/></RadialGradientBrush></Setter.Value></Setter>
            <Setter Property="Template" Value="{StaticResource CustomLineDataPointTemplate}" />
        </Style>
        <!-- Yellow -->
        <Style TargetType="Control">
            <Setter Property="Background"><Setter.Value><RadialGradientBrush><RadialGradientBrush.RelativeTransform><TransformGroup><ScaleTransform CenterX="0.5" CenterY="0.5" ScaleX="2.09" ScaleY="1.819"/><TranslateTransform X="-0.425" Y="-0.486"/></TransformGroup></RadialGradientBrush.RelativeTransform><GradientStop Color="#FFFDE79C"/><GradientStop Color="#FFF6BC0C" Offset="1"/></RadialGradientBrush></Setter.Value></Setter>
            <Setter Property="Template" Value="{StaticResource CustomLineDataPointTemplate}" />
        </Style>
        <!-- Indigo -->
        <Style TargetType="Control">
            <Setter Property="Background"><Setter.Value><RadialGradientBrush><RadialGradientBrush.RelativeTransform><TransformGroup><ScaleTransform CenterX="0.5" CenterY="0.5" ScaleX="2.09" ScaleY="1.819"/><TranslateTransform X="-0.425" Y="-0.486"/></TransformGroup></RadialGradientBrush.RelativeTransform><GradientStop Color="#FFA9A3BD"/><GradientStop Color="#FF382C6C" Offset="1"/></RadialGradientBrush></Setter.Value></Setter>
            <Setter Property="Template" Value="{StaticResource CustomLineDataPointTemplate}" />
        </Style>
    </datavis:StylePalette>
And the XAML that binds the style palette:
            <charting:Chart
            Title="Compressed control sizes over time" 
             StylePalette="{StaticResource MyCustomStylePalette}"
             x:Name="CompressedSizes" />
Hope this helps.