It appears the Upgrade keys are much more flexible than in the past, so it is worth a try at install. The worst is that you would have to use the key that came with the version.
No one I've read knows for sure whether an upgrade deactivates the underlying O.S. key, and MS's own Technet MVP's say it doesn't in case of reinstall need. It violates the EULA, of course, which says the upgraded OS replaces it except for reinstall.
Since upgrade keys are working in clean installs, you might want to try this providing your Vista Premium is retail so that you can migrate it to your friend:
1) Make an image of your Vista Premium install so it can be easily restored.
2) Try a clean formatted install booting from desired Windows 7 Upgrade version, which should take the key, or require the double "upgrade over upgrade" trick so the key is taken.
3) If this works, you can migrate your retail copy of Vista to your friend's computer, if not just use your backup image to restore it for in place Upgrade.
You will need to make a backup image of the finished job to avoid having to reinstall both OS in the future.