I've used it to write my papers for school (and it has done an excellent job in that area). I don't care much about MS Office compatibility. Although...
An organization I'm part of has used Office XP in the past to write its docs. Some of them don't open/save well in OOo 1.1, unfortunately. But the documents don't really *need* the cosmetic features they use from Word XP, they would have been just fine as a standard text document.
And I think this is true for 99% of all Word documents made. Unfortunately a lot of people still save them in word format.