<p>I have a DAV server (Oracle Portal in this case). If I open word and then enter the DAV URL of a document, I'm correctly prompted for username/password and the document is checked out. I can edit it and just click Save to save it back to the server. So far, so good.</p>

<p>What I need is a link on a web page that will open the document for editing in Word. If I just use the same URL as I use in the File Open dialog in Word, I get a read-only copy, and the File Save dialog suggests to save it locally. </p>

<p>Is there a way to open a document for DAV editing directly from a hyperlink? </p>

No. The dav protocol uses standard HTTP transactions, and unless the client is aware of the support for DAV, it won't know to use it.
Word is likely not DAV aware, and you're relying on people mounting DAV devices as a mounted network drive.
IE: As far as words concerned, its just like any other URL.
( Unless there is a way to tell word its specifically on a DAVFS system, via a url with a different protocol specifier, for example  davfs://www.google.com/  if davfs happened to be a registered protocol that your client recognised, this of course makes too much sense, and for that reason alone, you are unlikely to find it supported in windows )