In the web application I work with, pasting of Office material caused some significant issues (including embedded stylesheets that broke the entire page). But this is not an indictment of pasting actually... my recommendation is to allow pasting. But post-process the HTML submitted and remove all but allowed HTML tags. In particular, make sure to strip mso attributes, <style>, and <script> tags. I personally would go farther; remove all but very select basic HTML tags (<p>, <h?>, <strong>, <b>, <ul>, <li>, <br/>, etc) and clear all style, id, and class attributes completely.
This will allow you to paste in the HTML, but requests for specific fonts, margins, divs, spans and such will be removed. The formatting that is lost can easily be replaced if necessary, and this will (by default) cause all pasted content to conform to the standard stylesheet.
Exactly where you draw the line for allowed content is up to you, but I have found this to be an excellent alternative to wholesale blocking of formatting that usually pleases both parties. The only significant loss that I've seen with this method is paragraph options (margins, line spacing) and fonts... but I believe the end result (consistently formatted content) is superior because of this loss.