I don't know if you are still looking, but my company provides a solution you may be interested in. For $150, I will clean the list, NCOA, presort, perform a Variable Data Merge, return to you postal reports, merged PDF for you to print.
2 more cents
We do quite a few jobs similar to this. We're using Fusion Pro Desktop, and it works very well. It comes with a built-in imposition program, postal barcode fonts and optimized output streams for quite a few different devices.
As far as running offset shells back through a black and white device, we had a Xerox Docutech and found it to be problematic - multiple jams and breakdowns. We have switched to a Kodak Digimaster, and it works much better. However, we still have issues with offset ink coming off on various parts and causing problems over time. Especially if it's a repetitive graphic that gets run over and over in the same spot.
An HP Laserjet 4350 for about $400-$500 used will do what you need it to do and pretty fast too. Very low cost per page and you can refill the cartridges.
To the previous post: there's two things I would try about the offset ink coming off:
1. reduce the moisture content of the paper; put a dehumidifier by the stock;
2. make an adjustment to the fuser temperature by lowering it. (don't recall if this is user or service mode, most machines is under service mode) also a pressure reduction in the fuser may help.
What I theorize is happening is too high of a temp or pressure with too much moisture in the paper is causing too drastic of a difference in the two environmental states when the paper hits the fuser and is causing the moisture to lift off some of the offset ink and go to the fusers.
Don't adjust too much though or the toner may not fuse properly.
We also do the same with our Kodak Digimaster and we struggled with preprinted material. We played with heat and pressure settings and then found out Kodak has a fuser roller and special settings for this kind of printing. Ask your Kodak Tech for a Mod 19, it is a coated fuser roller and the settings get changed as well, reduces the oil and adds heat if I remember correctly. Made a hugh difference for us. We also researched offset inks and for these kinds of projects we switch to a different offset ink.
Do you have postal sortation software and are you familiar with current USPS Postal Regulations? (You might want to take PlanetDave up on his offer..........)