/etc/fonts/conf.d/70-no-bitmaps.conf only rejects bitmap fonts, they don't disable embedded bitmaps, which is the case here. I don't know why they didn't put the setting to disable embedded bitmaps in the same conf file. Anyways, put the following in your ~/.config/fontconfig/conf.d/20-no-embedded.conf (or, for older versions of Ubuntu, in ~/.fonts.conf.d/20-no-embedded.conf):
This does have to do with the anti-aliasing in Windows. It expects you to have it on in the OS, so they don't bother re-creating anti-aliasing in the Office Suite. If you disabled the anti-aliasing in Windows, it would look the same.
If wine's own font smoothing does not work, then I don't think it will. Here's a test to make sure its just the display that's wrong. Print something...does it look okay?
Maybe post a complaint on WineHQ under the Microsoft Office information; they may be able to help you more (and possibly fix the problem in their next update).
I have seen this problem too (on my own computer, I have Office installed as well). I learned to ignore it. Also try zooming in on the text to make it look a little better. Setting the view to page-width may help a lot.