I happened to be playing around with Word 2007 with WordPress again on another website I have setup. While I was playing, I stumbled across the insert category and it had 1 lists (there are at least 5 categories on the site) but the only one listed in Word 2007 was the "Description" of the only one that has a description. J
So, All in all. Word 2007 can deal with Categories from WordPress sites. But for it to do so, you need to have descriptions in each category on the site.
I’m still trying to figure out how or if, I can add tags to posts. Surely there must be a way of doing it. Anyone know? J