I don't know of any specific software, but do have a couple of ideas (in case you end-up building something) that i'll just toss-out. First, you could utilize some of the free resources at the XDXF website http://xdxf.revdanica.com/down/
such that your content could come from them (as an option, anyway). For example, the paragraph that you would load could be, instead, from the Dictionary of Idioms, for example, such that your students learn two things at once -- idioms and spelling. Then you could edit the idioms and misspell (sp?) words contained therein. Another thing you might be able to provide in such an appliciation would be some sort of reading comprehension tool -- ie. to "force" kids to read more carefully: You could load your paragraph, and then choose to either misspell some words, or, Mode "B", where they read the passage as originally provided, then click "next", and now are presented with the same paragraph, only with various words (of your choice, perhaps) mixed-up with corresponding inline drop-downs to put the correct word in the correct place. And a whole host of other variations along these lines would be possible...but your idea sounded to me like it could also be one of several features of an application with a slightly larger scope, but which utiliizes some free resources. Heck, there are all kinds of free books and what-not on line (beyond the mere reference-type things i was suggesting)...good luck!