Hi Mary,
These are some great questions you have. Mail Merge does have some limitations and these limitations make it tough to do the things you are looking for.
In regards to your first question, there is not an easy way to remove the formatting. Since the field is of type currency, CRM includes the formatting into the merge fields. An easy way of removing this is to simple do a Find and Replace in Word while you are previewing your letter. You will find $ and replace it with nothing.
In regards to your second item, I'm not quite sure how you are reproducing this behavior. Are you saying that different merge field dates are showing different formats or is it the same merge field but with different data? If you can provide more understanding on how to reproduce this, it will help me determine what the best action plan would be.