In short, no, Pogoplug can't do this.

A good way to think about it is comparing it to your computer. If you don't have a media player installed on your home PC, you can't listen to music. If you don't have Photoshop installed on it, you can't edit psd files. Now think of the Pogoplug web-interface as a PC. This "PC" has SOME "software" installed that enables it to stream videos, music, and view photos. However, it doesn't have a word processor or a photo editor installed, so you can't edit word documents or photos.

The GOOD news is that if enough people want this functionality, the developers could add it. But for now, if you want to be able to edit documents without having to download them, I suggest you just use Google Docs or a similar service.