The 7 runs quite well actually on "millennium" hardware. I've tested it succesfully on AMD K6-2 500Mhz with ~700MB memory AMD K6-2 500Mhz with ~700MB memory (512+256 and off that 32MB to shared with graphics). I did try to drop cpu around 300MHz which was the lowest possible and took out the 512 memory chip... System was still somewhat usable.
One thing on the experiment was very interesting. While the system was on the full setup the cpu showed 100% usage When with the fewer cpu cycles and memory the cpu usage dropped to about 70%. Maybe the swapping took its toll
In case you were wondering, it is possible to have below 1.0 Windows Performance Indexes. This system has index of 0.7 on both configurations and I have seen multiple systems with index of 0.8.