It's not a huge surprise, but Windows Home Server's Connector software works just fine with Windows 7. Everything from the client to the backup software acts appropriately.
Two small inconsistencies that you should note. One, in the backup screen, WHS will display your machine as "Windows Vista Ultimate" instead of Windows 7. Not a big deal. Two, you can't use the newer Windows 7 backup option, where you can choose which folders, specifically, to back up. You can only back up entire drives, but you can (one by one) exclude folders from the backup. Tedious, but it works.
Other than that, everything else is snaztastic. Time to get one of these Windows/Mac compatible HP MediaSmart servers with Windows 7.