It is perfectly feasible to repartition and run both, there are howto's all over the place, and searching the forums here will probably explain it all fully as well. I use two hard discs, and have actually deleted win98 on my desktop now, so can't specifically advise on this issue.
As to MS Office, I wondered how I'd do without, until I tried Sun Star Office (download from www.sun.com
,on magazine cover CD's, or buy it); this offers compatibility with MS Office files, though there seem to be a few problems with Office 2k file formats.
I would get some network cards, and connect the two machines with a hub or crossover cable, so you can access the main PCs drive. That way, your bedroom machine won't need vast drive space to store your work. You will need to setup Samba to share files between systems, but you can work on them with star office, and save them back where they came from as MS files again, so you can send them to windows users without fear.
The only caution here is that once you start using Linux, you'll spend so long tinkering and playing with the settings in order to get everything perfect, then better again, that your voluntary work will lie forgotten!
Go for it.