Here's a workaround to the linked image issue:
By adding the following macro to your mailmerge main document, clicking on the 'Edit Individual Documents' button will intercept the merge, finishing it and unlinking the pictures.
Code:
Sub MailMergeToDoc()
Application.ScreenUpdating = False
ActiveDocument.MailMerge.Execute
ActiveDocument.Fields.Unlink
Application.ScreenUpdating = True
End Sub
The only potential disadvantage of intercepting the 'Edit Individual Documents' process this way is that you no longer get to choose which records to merge at that stage. However, you can still achieve the same outcome - and with greater control - via the 'Edit Recipient List' tools.