I would opt for creating a PDF file on the server. There are many products that do so but you should research the one that works best in your case considering the following:
- Computer resources needed to create the PDF. If it's a complex document it may take too long and or slow down the response to other users.
- Number of concurrent users that will require this same function
- Cost (there are free solutions as well as heavy weight commercial products).
I would not rely on Word format for that as PDF will give you some more guarantee that it will be readable in the future.
Also, the option of embedding hard links to the images don't seem a good idea to me. What if the user wants to open the document and the server is not accessible?