I've thought about getting into TeX at some point, but I have too many other projects going on to try learning something else right now, and to be honest I don't compose enough, or complex enough, documents to justify it. Just had to throw out that I'm not opposed to the idea.
For the past several years, I've been doing all my word processing with Nisus Writer 4 on my Quadra 840AV (the version Nisus offered for free on its website for a while). I used Nisus Writer 6 while my main computer ran OS 9, switched to Word for a while after upgrading to OS X became necessary, and then went back to Nisus when I got the Quadra as a sidekick machine.
This is the setup that got me through college (I went for history, so lots of writing there). I'd use all the screen space on my G4 for arranging sources and doing research, writing the paper itself on the Quadra. When I started out, most everything was printed, but by graduation most professors were asking for electronic submissions and I was churning out files with PrinttoPDF. One or two specifically requested submissions in Word format, so I installed Word 5.1 just for those assignments. I don't do as much writing since graduation, but when I do, it still all happens on the Quadra, which now has a 21" SGI monitor to help things along. I also have ClarisWorks 4 installed, partly for nostalgia purposes because it's the first productivity software I used in school, but it's also good for throwing together a quick spreadsheet.
I used Office 98 for a while. The toolbar icons were kind of ugly, but it was a good suite of applications that seemed to play well in the Mac environment. 2001 was even more polished (mostly in terms of having nicer icons)... I would have kept using it if I hadn't gotten hooked on Nisus Writer.
One last shill for Nisus Writer - the Nisus document format keeps all formatting information in the resource fork, so if it ends up in the hands of someone without Nisus Writer, they still get a clean text file. Try doing this with a Word document and you get a garbled mess.