Yeah its a bit rubbish. For things ive needed images in I do the basic outline of the doc in onenote with images in then ship it into a word doc on my desktop and finish it off that way. But word on WP8 is incredibly basic
I also love how the cut and paste bubble disappear in Exel from time to time.
If you have a word with symbols like "%", you need to move the selector marker, and the bubble will then sometimes disappear.