Yes, it worked. In a word: painless. I had no problems installing the new Windows 7 Beta (build 7000) on Virtual PC 2007 sp1. I assumed that Win7 was closest in architecture to Vista, so I selected a Vista configuration and bumped the Virtual Machine memory up to the required 1GB. I left the default max virtual hard drive size at 64GB. The host OS is Vista 64 on a quad core 8GB machine. I "captured" the ISO install file located on a network drive on another machine, then rebooted the virtual machine and installation proceeded from there.
Things I noticed about installation: less user interaction required to get it installed. Yes, there was the usual location and time stuff, but there was less other stuff. And it only rebooted once to complete the installation which was great. I did ask for the product key which I was given before I downloaded it and it did the product activation automatically. Whether all this simplicity remains in the RTM version, we'll just have to see.
Windows 7 Observations: some user interface changes -- more glowing things like icons and bars. The start menu button glows when your cursor hits it. The layout of the start menu is a bit cleaner as is the Windows Explorer layout. The start menu does look fairly much unchanged other than small appearance changes. Everything is where it was in Vista. The taskbar is bigger -- approximately twice as high and the programs are shown as icons without their names. This appears to be a departure from earlier OS's. Maybe some of you will notice that the default background screen is a fish -- not just any fish, but a betta -- you know, a play on the word BETA. I think it should be a active background with the fish moving around. What a cool timewaster that would be.
Another biggee is less and I mean way less of those annoying UAC messages "are you sure you are sure you are sure...". I was able to open the registry editor without a big argument from the operating system -- nice!
Another thing that is on every window titlebar is the "Send Feedback" link. I guess they want feedback, but since I've only used it for an hour, I'll hold off.
So far, I like what I see!