I don't think there is a way to do this using fields, at least not without
writing your own text converter, which I cannot recommend.

To do it, you would have to construct a field that returns a testably
different result depending on whether or not the file exists, e.g.

{ INCLUDEPICTURE "{ IF "{ SOMEFIELDTYPE "<picturepath>" }" = "Error! File
not found" "<blankpicturepath>" "<picturepath>" }" }

I don't think you can successfully use INCLUDEPICTURE as the SOMEFIELDTYPE.
In theory you might be able to use

{ INCLUDEPICTURE "{ IF "{ INCLUDETEXT "<picturepath>" \c Recover }" = ""
"<blankpicturepath>" "<picturepath>" }" }

but in practice Word seems to get very confused if you attempt this (it
takes quite a long time to read large image files, for one thing), and does
not reliably evaluate INCLUDETEXT in the way you might hope. Possibly worth
trying for your own satisfaction.

Another approach might be to use a DATABASE field to invoke some SQL that
tests for file existence. However, I don't think you can do this using Jet
SQL because none of the functions you might use for that (dir, filelen,
etc.) are available.

Other ways you can potentially avoid preprocessing (other than
postprocessing!):
a. the official way, using Word's MailMerge events, e.g. in VBA
b. if your data source happens to be an Access .mdb and you can connect
using DDE, write an Access VBA function that tests for file existence and
returns either a flag or perhaps the name of a blank file. Then call that
function in an Access query and use that query as your data source. (NB, as
far as I know, you can't combine this approach with the DATABASE approach
because the DATABASE field cannot get data from an Access query via DDE any
more).

Peter Jamieson