Andy, the work around is not acceptable. First of all, Document Connection does not synchronize - I'm sure you know that. I don't get any other updated documents (that other users have updated) on my harddrive with Document Connection. Also, I can't open offline with Document Connection.
The real answer should be that Microsoft have a OneDrive for Business for Mac - but while there's none, the interoperability between the virtual machine on parallels running OneDrive for Business on Windows should work with Office 2011 running on the Mac - it doesn't due to he ._files that Office 2011 creates.
As for rich formatting, I did that earlier but the image uploaded is still not posted. After uploading I only see a box with a ? inside.