I picked this gem up from Tony Sonyo of Microsoft blog. Tony picked it up from the Microsoft Word Team blog who gives a good bit of information about just exactly what redaction can do for you here.
Law offices and personnel departments finding their offices plagued with requests for documents will find this tool indispensable. It basically lets you black out sensitive text in a word document.
The officially supported previous Word 2003 version of the redaction tool can be found here.
While Microsoft has not officially released a 2007 version of the Microsoft Word Redaction tool and are not supporting this you can now download the one the developers are working on Codeplex here:
Have at it!