Re: I admit, I am Word Processor inept.
The biggest rule is that writing and layout are different steps of the process, and need to happen at different times. If you try to build the layout while you're entering the text you'll keep fiddling with the layout as your requirements change, and both the layout and the writing will suffer.
Ideally you should write your text in as simple an editor as you can manage which still supports all the features you need, then once it's done (and you've done the first draft proofreading and editing) you import it into a proper DTP app and do the layout all in one go. That way you know how many levels of heading you have, how big your chapters are, whether you have sidebar boxes, etc, etc.
Now the inevitable plug:
<plug type="shameless"> I wrote a word processor specifically for doing stage 1 in; it's called WordGrinder: http://wordgrinder.sourceforge.net/ It supports plain text with bold, italic and underline; a small handful of non-configurable paragraph styles; it imports and exports most standard formats, including HTML and ODT. It runs on Windows, OSX (but you'll have to build it yourself), and Linux (it's in Debian). I've written about 150k words on it. It's small and relatively efficient and it gets the hell out of your way and lets you get some work done --- you can configure it to give you a completely black screen with your text on it and *nothing else*. </plug>
Or if you want to spend money, use Scrivener.