Hm ... can you give us a small drawing explaining your request? It's not too clear to me. Do you want an animation? Or an image that contains both words and the morphing?
If you want to do a single image, I guess you should check out Gimps IWarp filter. It's found at "Filters > Distort > IWarp" as far as I remember. Then write down both words on 2 seperate layers, use the IWarp to shrink and twist, then distort the end of the words as you like.
For animations, wait until Maffe is back from his holiday trip
I don't know anything about that.