Creating protected mail merge form templates

[crim]

I wish to provide my users with a standard document that can be run as a mail
merge letter. This letter will need to contain protected text, interactive
field boxes filled in at time of use as well as the mail merge fields. I have
tried two ways to do this:-
1) Create a template (*.dot) with both form field and mail merge fields as
required, and then protect this, but when a new blank document is created by
user based on template the mail merge facilities are not available because
they are protected. If a new mail merge document is created based on an
existing file or template then I loose the text protection.

2) Create a template with just the form fields required and protect this,
from this create either a second template file or actual file (*.doc) to
include merge field and get users to create mail merge file using templates,
but this again looses the text protection.

Am I missing something in either the way protection works or is there a
conflict between form fields/merge fields in how I am trying to use them.
Help would be appreciated
Thank You