Without knowing the actual model you have your questions are not fully answerable.
You may be able to run Office 2004 or earlier as they would be the PPC versions. However, I don't know where you could get it as they are all obsolete.
I can't tell you what you can upgrade OS X to because some models can run only Panther while others can run Tiger and/or Leopard. We need to know your exact model identifier which you can find by opening system profiler in the Utilities folder. The ID is displayed on the right.