Russ - if all the "items" you add to the book are a single page or less then you will probably not experience any problems. These arise when you completely fill a page or go on to another page, because the pagination changes between edit mode and print preview mode.
As a word processor it is very basic - you have very little control of headers/footers and page numbering, particularly in terms of layout. These are the little details that make the difference between professional-looking output (which is what you want in a book) and basic output. Maybe Ancestry aren't putting much effort in because they want you to go online and buy from their book options there.
I like many of its features - being able to easily find media items and insert them, but I can also just drag and drop them into Word. I haven't seen the problems with the RTF export yet (maybe because I abandoned the table of contents in favour of getting Word to do it) so I'll probably use the book feature to collect together diagrams, source citations etc. then I'll export it and collect it into a book using Word or Acrobat.