There are 8 report engines. Considering none of them allows to input Word documents, the best one for you seems to be any that can input odt (you will have to convert your .doc in .odt), this means either 2. OpenOffice Report Designer or 7. Aeroo:

1. RML/Reportlab: This is the default engine in OpenERP until v7. It will require you code rml reports. You can take example with any rml file in OpenERP to see how it is built.
2. OpenOffice Report designer: This is an interface that is more user-friendly because you create/edit your report (in .sxw format) in OpenOffice. You need to install the module base_report_designer.
3. Google Spreadsheet: Allows to retrieve data from OpenERP into google spreadsheets in real time with regular formulas. You need to install the module google_spreadsheet and a script in your spreadsheet.
4. Webkit: Allows you to create reports based on html+css. You need to install the module report_webkit.
5. JasperSoft: Integration with Jasper Report Server.
6. Pentaho: Integration with Pentaho.
7. Aeroo: Allows to input ODF filetypes (LibreOffice) and ascii-based formats and output in a number of different formats (MS Office included). Often considered powerful by the community.
8. QWeb: This will be the default report engine of OpenERP v8 and moving forward. It's a wysiwyg editor also used for the upcoming CMS capabilities of OpenERP. Will be available here when released.