The Word hover toolbar was one of the innovations in office 2007 (along with the Ribbon, live preview, and contextual grammar) and it’s one of my favorite features for the reasons you specify. A truly awesome feature that does not get nearly enough attention and is missing in places like google docs.

Often, I find that I have no need to actually use the ribbon, because what I need pops up near my cursor when I select the text I want to edit.