As far as I know, Microsoft went to some sort of xml-based representation in their most recent version of office. If that\'s really true, then I would assume that version c
There's the zipdoc extension for Mercurial, which seems to handle compressed files like XML-based Word documents by storing them uncompressed internally in order to get meaningful deltas and in order to merge them in a meaningful way. I did not test it, but it sounds like the thing you're looking for.