Use R code or Windows user variable ("%userprofile%") in YAML?

The problem is that the parameters in the output field is only understood by rmarkdown. Pandoc does not understand them, so you need to make sure rmarkdown can evaluate the expression. Since rmarkdown uses the yaml package to read the YAML metadata, and yaml's syntax for R expressions is !expr, you can put the R expression after !expr, e.g.

output:
  word_document:
    fig_caption: yes
    fig_height: 4
    fig_width: 7
    reference_docx: !expr file.path(Sys.getenv('USERPROFILE'), 'Documents', 'template.docx')