As I began to rely solely on Word 2008 for my needs, I found myself messing around with the app to customize it to my needs. One of the first and most basic issues I faced from the get-go was using my own “Normal.dotm” template, as well as my letterhead. I could of course double click on the template files on my HD and work on the same in Word, but that was an extra step I didn’t wish to undertake, not to mention if I happened to press CMD-S I could overwrite the template with whatever I happened to be working on then.
Turns out the solution, in true Mac fashion was simple. The default template “Normal.dotm” resides in

~/Library/ Applications/Application Support/Microsoft/Office/User Templates/Normal.dotm

Open it in Word (make sure to open it via Word, and not by double clicking the file). Modify the template, and save. Voila, the template is modified. This location is also the central repository for all templates.
However, if you are anal like me, and don’t like personal documents, templates and such lying around in the ~ folders, make a Symlink!