While trying to create some fancy cards from a mail merge, I worked through a couple references. I started with these instructions that attempt to cram all of the work into the template itself. While it may work just fine, it did not work on my first attempt. I went to a slightly more manual approach as described here. Step 10 requires you to select all the new letters and update the image file links. That's it. The formulas can stay a little shorter as long as you are willing to do one quick step at the end of each merge.