The sharepoint team recently posted an article up on on how they allow you to convert files in the Office Open XML format into HTML directly on the server:

When they started investigating this solution, I made sure to point them at the XSLT that we build in Office 2003 to convert the earlier version of WordprocessingML into HTML (

This article goes into the details on the challenge they faced with images as images are embedded by default in OpenXML and HTML doesn't allow for embedded images.