I trust the Office team, and they have been very clear to call this a preview (it shows in the top of the document) so I expect some issues. I obviously can not know if your specific problem is already fixed in the RTM version (that released a couple weeks ago) but usually the Office team releases high quality products.
I did not experience your CPU/word problem yet, you asked for a video, and I posted it here:
As you can see, I enabled the new task manager, that is really cool and you can see how the Tegra 3 CPU (4 cores) does not even notice the typing, even with tons of spelling mistakes to force a worst case scenario.
It is really a pity you did not have it a bit longer, I have an Ipad 1st gen, a galaxy tab 10.1 1st gen (yes, I had it even before I could install ICS, my lord) and now a 1st gen surface and man, this device is impressing me so far. When I connected my Galaxy nexus to it and it opened the windows explorer so I could use it to transfer my videos to You Tube I realized how huge is having Windows in a Tablet, it is not a PC but boy is powerful, full USB not only client, but server support.
Mmind - thanks for the update, but this doesn't replicate my scenario. Can you have multiple pages of text (at least 2) and then go back up to the first page and start adding text? That's what really nailed mine.
as you can see, 20 pages full of errors, spell and grammar correction enabled, writing in the first page. It clearly shows more CPU usage than the first test, but always below 40% for every core.
Please, note that I am not trying to say that you did not hit a bug or even a faulty device, just that I have not been able to repro it in my limited testing and so far the device is totally impressing me. I am even thinking to write a cool Hackers News app for it :-).
Yes, I used a touch cover, I do not have a type cover. It may have been multiple things, a defective surface, a bad cover,... impossible to tell, I doubt is a generalized type cover issue as I would assume people would be reporting it all over the place.
I am a really happy camper, today I tested the RDP connection to my main server and works really well, you can get real stuff done using remote desktop. I was sure I would need the Surface Pro and now I am not so sure as I can do heavy lifting with more battery life and lighter device (and I will always need a "real" computer in the home anyway). Surface Pro looks awesome for pen and I am a big fan of ink well done (need to test a capacitive pen with the RT but usually they do not meet my bar). In any case, I will surely keep my unit, I did not feel so happy with a new gadget since the ZX spectrum, my first HP48 (yes, I am that old) or the iphone. I was not sure after reading some of the early reviews but this device is a geek's playground, I will be discovering new tricks for a while, the connection to the XBOX is pretty cool too and seems to work fine for movie navigation but did not play much with it yet.
I see that you have updated your post with the update information, that was very honest of you.
Just wanted to let you know that, in fact, I had updated my Surface as soon as I got it just by searching for windows update in settings and clicking it (it was painless in my case), I even did it tethering with my Nexus. So my tests are using an updated device.
BTW, feel free to link to my videos if you think they can complete your post further.