LIke Ben says, you won't be able to print to the users printer "from the servlet". Can't you just provide a link to the file, which allows the user to access the document directly, thus allowing him to print it whereever he desires?
As to watermarking a Word document, have a look at the
AccessingFileFormats page. The POI, WordApi and (particularly) OpenOffice packages may help with this.
[ September 21, 2006: Message edited by: Ulf Dittmer ]