No, there's not any really good way to do this in PPT.

You might consider copying the textbox, deleting all but that word, applying
a red font color, and using an entrance animation or something to fake a
highlight. The kerning on the text might be off a bit, though, keeping the
"overlay" from matching the original exactly, I don't know. In 2003, I do
know a single word's kerning may be slightly different than that of the same
word in a block of text. Apparently that's PowerPoint trying to be
"helpful," and there's no way to turn it off or bend it to your will.

But 2007 allows the user to kern text, so perhaps it's no longer a problem,
making this a viable workaround for you.

I did this awhile back (in 2007) where I had two text boxes on top of the other with the top one having the different coloured text when I clicked on the screen the second box appeared where the majority of the text was the original text colour and the emphasized text was another.

 I have 3 words in a paragraph that I'd like to animate with emphasis by
 transitioning to RED text.

 If I highlight a single word and apply the animation effect, the entire
 paragraph will change to red.

 One solution is to break out the word into it's own text box.  This creates
 alignment issues which can be a real downside.

 Is there a cleaner way to get the effect I'm looking for without creating
 alignment problems?

 (running PP 2007).

 KC