* Wince * Well... I'll give you straight and honest answers, but they might not be the ones you were hoping for.

1) Yes, you can. Abiword and OpenOffice are both possible for .doc. They are third party and you will need to add them and may need OpenOffice in a chroot (it's been a while since I checked)... really that is pretty easy too thanks to Qole and others. KDE (no chroot) is also possible.
2) Not sure about this one... basically only if it works with OpenOffice, Abiword, or KOffice, though.
3) No, sorry. Mplayer offers great performance, but the 3d acceleration is disabled so it isn't as good as you're hoping. 720x400 is more toward the absolute top of what it can do, although I think it looks great.