The sharepoint team recently posted an article up on OpenXMLdeveloper.org on how they allow you to convert files in the Office Open XML format into HTML directly on the server: http://openxmldeveloper.org/articles/MOSSconvert.aspx

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 (http://blogs.msdn.com/brian_jones/archive/2005/09/30/475794.aspx).

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.

-Brian