I would like very much to use the beautiful Jellyka-Estraya font to address envelopes, but in order to make it readable, I must enlarge it to 48 point, which causes unnaturally large spaces between lines. It is like I am double-spacing. Am I doing something wrong? Is there a "fix" for this?

You are doing nothing wrong. This line spacing is inherent to the font to avoid vertical overlap of certain characters like for example the 'y' and the 'Yacute'.
The workaround is to set the line spacing to a negative value in the application you are using. -0.6 or -0.7 will do with this font. To improve readability you could set the letter spacing to a positive value. Experiment a bit and you'll find a solution.

Thank you very much. Hopefully I can figure out how to do this in Word 2010 or Excel.

With Word it is easy, it is all in the menu. But, why with Excel? Doesn't add anything to the functionality of a spreadsheet.