TL/DR: Not possible for anyone outside IA, and not possible at all if any 3rd party modules generate their own resources.
Project files can contain all kinds of serialized resources, with the binary encoding defined by the Ignition module (including 3rd parties) that generated them. Some of the encodings expand to exotic XML with recursively nested binary encodings. All of the encodings depend on the serialization technology chosen by the module author(s).
This is still true in v8+ for Vision and a variety of other resources, but the binary content is at least broken out into folders for a slightly improved VCS experience.
There is no work-around. In my not-so-humble opinion, it cannot be done. If you must have your projects in a VCS, upgrade. Even after upgrading, be prepared for your VCS experience with Vision resources to be somewhat unsatisfying.