<< Run both. I have that exact dual boot on my machine right now.
No, office XP will not work for linux. You'd need a linux compiled binary, which means you'd need the source code, which means breaking into M$...
You could get VMWare or win4lin (check out tomshardware.com for that), and run XP inside linux as well, and get Office XP functionality while using linux that way.
RedHat is also good, but Mandrake is a bit more new-user friendly and will be the easiest to use. >>
Then again, if you're going to emulate an OS, why not run that OS in the first place?
But if you want to try it, install both. You can uninstall it when you realize you're using WinXP 97% of the time, and only boot into Linux to show your friends how 1337 you are.