Here's a link to another post of his that's basically for the same thing in Method #2 there. We've used the same method here as well. I just provided a REG file to make it easier to do instead. Clean Install Windows 7 with Upgrade Media
As long as the user meets the requirements in the red Warning box at the top of this tutorial, then it is perfectly legal. Microsoft left this option available for their customers that meet these requirements so that they will not have to say install Vista first, then upgrade to Windows 7.