RTFTemplate

RTFTemplate is the Java library that does what i was looking for; it allows replacing MS-Word mail merge fields by actual data on the server side. So users can still define their document in the traditional sense using mail merge, save it as RTF and the server use it as a template to generate new documents.

The issue however is how scalable this solution is in the long term; for example how easy is to add pieces of text to documents? Converting to PDF, which is necessary in my case, is also still not solved. Using Open Office as a templating engine would solve this. However running OO as a (headless) service complicates things; it is an external process, i'm not sure about memory leaks and/or how robust it is.

Another con of using OO is that - since Word will still remain the document editor for the user - the fields have to be typed in as regular test with some markers, for example ${lastname}. This makes it a little less robust, typos are easier made, deleted by mistake, control characters within the field.