It turns out that not only is Office for the iPad fully functional (even in airplane mode), the subscription to Office 365 actually might be a pretty good deal, depending on your usage. An annual subscription to Office 365 for $100 entitles you to up to five downloads of Office for the Mac (2011) and Office for Windows (2013). These are fully functional and work in offline mode. You are also entitled to five installations of Word, Excel, and PowerPoint for iPad. iPhone, Android, and/or Windows Phone. (You could have guessed that last one.) This is my brief Microsoft Office for iPad overview. And, if you still have doubts, there is a 30 day free trial. Presumably, every time you launch an Office application, it checks in with the mothership (aka microsoft.com) to be sure you have a valid license.
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Earlier I admitted my error in reviewing Office for iPad. Now I can recommend Office 365 as a pretty good value if you are a home user with multiple computers and devices.