I fear I misled the discussion. Actually, it appears that Word will not open either txt or rtf files. The question should have been how to open txt/rtf files in Mac Word. Word for Windows open both formats.
Following the lead of one of the answers above, I changed the txt or the rtf extension to doc. A choice then appears "Are you sure" Choose .doc or .rtf/.txt. Word/File/Open then recognizes the file and opens it.
If that is the only solution, is there a script for global changes of extension that would also answer the "are you sure" question? Or will each of the hunreds of text files have to dealt with individually?
Re the Save As question, seems to be no longer part of the equation, but for what it is worth it was TextEdit 1.4.
iMac Mac OS X (10.4.10)