I just wanted to follow up.

The deleting the '\* MERGEFORMAT' didn't work. This seems to be caused because when removed, it reverts back to the original bookmarked text (not the nearby text). When you change the format of the cross-referenced text, word then re-applies the MERGEFORMAT tags.

Changing MERGEFORMAT to CHARFORMAT however, does appear to allow you to alter the cross-referenced text and it will persist through other bookmark changes. Word won't change this to MERGEFORMAT upon a reformatting of the text.

Thanks for the help. If nothing else, it solved me a big annoyance. Is there a way to default cross-referenced text to apply the CHARFORMAT vs the MERGEFORMAT?