Hi jwwillia,
The 'location' information for a frame relates to whatever object/paragraph it's anchored to. I'd expect the contents of the frame to be 'inserted' into the document immediately after that, but I'm away from my own PC this week and next, so I can't test this.
The formatting should be maintained according to whatever styles were in force for the paragraphs within the frame. If, for example, the frame defined an area narrower than the style's margins then the text would be constrained to the frame's borders. Take away those borders, and the page or column margins take over. I suppose one could code around that, defining new styles for the affected text, but that would only go part of the way to dealing with all of the page formatting variables influsenced by frames. For example, it wouldn't restore any text wrapping for body text that previously wrapped around the frame. And I'm not sure could could achieve that by anything simpler than a frame or text box.
Perhaps you should try a different pdf-to-Word conversion application - some may do a better job of retaining formatting with fewer frames than others.
Cheers
[MS MVP - Word]