I want to set Build Settings that are specific to each architecture (armv6 vs armv7). This is easy enough to do in the Xcode GUI, but I try to put all project configuration in .xcconfig files. Is it possible to replicate the following configuration (Thumb enabled for armv7, but not armv6 architectures) using .xcconfig files?

Yes, you can do that.
It’s hard to find documentation on this. Apparently it was in the Xcode 3.0 release notes, but good luck finding those in Apple’s current docs.
To solve your particular problem: