If this project is just for fun, and if you already are using Visual Studio 2008, then WPF is a good choice for this.
If you intend to make this a commercial project, however, I would recommend making it a WinForms application. WPF requires Visual Studio 2008 and .Net 3.5. Many Windows users (especially corporate customers) are still using .Net 2.0 and don't plan to upgrade soon. Some are even still on .Net 1.1 (or no .Net at all). .Net 2.0 comes pre-installed now on new PCs, and the installer for 2.0 is only 23 MB (versus close to 200 MB for the somewhat-buggy .Net 3.5 installer). Also, .Net apps can (potentially) be made to run on Mac, Linux and the iPhone thanks to Mono, but Mono now is somewhere between .Net 2.0 and .Net 3.5, so WPF applications can't be cross-platform yet.
Here is a previous answer to a sort-of-similar question about doing a zoom effect in .Net with GDI+:
http://stackoverflow.com/questions/1140360/auto-sizing-zoom-on-an-image-in-net/1140538#1140538
This should give you a start on doing this kind of graphics work in .Net (and it's as open source as it gets).
Update: If you want to render XPS documents (easily), then you should use WPF. However, this choice would effectively eliminate the possibility of making your application cross-platform via Mono, at least in the short-term.
An alternative would be to export your documents as PDF files, or use Adobe Acrobat to convert your XPS documents into PDF files. Here is a link to a CodeProject sample that renders PDFs entirely in C#/.Net 2.0 or older:
http://www.codeproject.com/KB/showcase/pdfrasterizer.aspx
This code would allow your WinForms application to render a PDF file as a collection of Bitmaps (one for each page), and from there it's a relatively simple matter to display these Bitmaps in the manner you describe (with zoom and everything). Because the project would use .Net 2.0, it should work in Mono without any modifications.