I'm not doing it entirely manually. I use programmable keys on my keyboard. One to select and copy the picture (using a mousekeys macro) and another to trigger the macro in Word. It takes me about 45 minutes to an hour to do 400 nametags depending on my concentration.

The macro first exectutes a paste special -> As image to get the image on the nametag correctly. It then sets the word wrapping, size, and position.

I see what you mean by saving them for safety though. I hadn't thought about it that way.

Would it cause issues to link to non-existant files (name + .png) in the merge? That would mean I would just have to cut the pictures out and save them into the directory it's pointing too.