Perhaps it is better to clarify the functionality of what the user want rather than describing the way it is working now.
I have done an awful lot with mail merge, even making different letters based on certain criteria in the database. For achieving that I made a macro which would loop several times through the data. Sometimes I attached directly a dBase file, other times I first made a catalogue from the external data in a word document. That was sorted on the criteria and next the different letters were run against the catalog. Another time I used Excel and applied a filter there. Or I applied a formula and then a simple query within Word to select the required records. Queries in Access were sometimes very handy as well.
These are just a few examples.
My conclusion is: there is no general best solution.
However, (nearly) every problem with mail merge can be resolved depending on the structure of the data, personal preferences, the amount of work to be done by the user, investment in macros and the frequency of it.
The macro [VBA] programs I made were used daily, sometimes resulting in 60 batches of letters from one data source. So I had to include a file naming system as well, making it simple for the operator to know which paper with letter head to use for a given batch. Even the amount of pages they required was mentioned in the filename. I assume you do not need all these complicated tricks.
Just clarify a little bit more your environment.
Good luck
PS.If you want to mail me put also Q&A in the subject line, else the message will be deleted.
