What exactly do the extra words of power do? Apparently it let's you charge up a shout, but it says the recharge time is increased? And how exactly does an extra word affect a shout? Like fear, does charging up fear make it last longer/affect higher level enemies?

Yes, the longer you hold the button down, the stronger the effect and the longer it takes to recharge it. I have not figured out how to do an intermediate Shout, as if I have all 3 levels and only want to use one. Probably just a tap, but I just mash the button. I figure more power is better than less as most battles are over before it recharges anyway.

Yeah, if you have all three words in a shout:

Quick tap = First word
Press and release after half a second or so = Two words
Hold it down = Three words

It still seems like I have no control over the intermediate levels.....

It can be tricky to do, but it is possible. Once you get the timing right it's easy then

Perhaps a mod (although i have the x box version >.<) can be made where you select what level of the shout you want to use with a press of a hot key and the game charges it accordingly. That would definitley make charging it less frustrating.

I can never get it to do just two words, it's either three or one. Which is fine because I've never actually only wanted two, just tried it as an experiment.

To Op, more words means more power. Exactly what that means depends on the shout. fire breath more words equals more damage, become ethereal lasts longer with more words, throw voice has a shorter cooldown, fear effects higher level enemies wb44 lasts longer etc....

You get better at timing it right when you obtain all three words of power and listen to the "rhythm" of the full shout. If you want to shout an intermediate Unrelenting Force you just have to release the button during the pause between FUS and RO.