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Office can't be installed on TS in the normal manner. It has to be installed with the office admin pack in TS mode.
TS and Office both license the client to the user, not as a generic group. TS 2000 used to do this but not 2003.
For the logging you would need a logging application for ease of use. Windows itself can do it but it doesn't make reports, is diffucult to setup, and isn't intuitive at all. It isn't capable of logging idle time or program idle time. Start and stop of an application would require additional script programing to do the calculations and then more for report generation.
Specific hour blocking is easy.
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