In MailMerge, add a variable:
Dim oMailMergeDoc As Word.Document
instead of appWord.Documents.Add yada yada
Set oMailMergeDoc = appWord.Documents.Add (yada yada)
(You'll need to use parens when setting your document object to the result of the documents.add function)

now you have your document variable populated with the document you're about to tell to perform a mailmerge. Use the document variable to do the save, not the appWord.ActiveDocument.

Change your MailMergeToExcel so it can accept a document parameter, like so:
Sub MailMergeToExcel (oDoc As Word.Document)

within the routine, replace the use of ActiveDocument with your passed document object variable for the actual mail merge.

Now back to MailMerge, add the following call to your newly parameterized sub...

MailMergeToExcel oMailMergeDoc

All the code should be in
excel, including the stuff you were asking if you should dump (that's the mail merge code, after all!)

step through the code and see what happens.