I saw a site that uses iframes to allow a use to write the text in word format, and the form then posts this in html format to the server.
The example is on www.mixmail.com, it's a free Spanish email site which to see the example you will need to sign up for. Go to compose an email and you will see the iframe box. I downloaded to whole lot and hacked out all of the mixmail stuff so I could use it on a test site.
Problem is that it only works on IE(not sure what version) but at least 5.5+
For another way to display word processing forms, I wrote a templated letters module which uses merge fields to allow you to customise a word document and automatically generate an RTF file for download/display.
The module relies on you providing a query which will pull out the necessary merge fields and associating the letter with something like a ticket or a ticket category.
You can then save the letter as a general comment for later download.
I haven't gotten this module up to scratch yet, as it's customised for my application, but I could generalise it more if anyone wants it.