Incorrect. As has been tracked here starting within an hour after Win7 Upgrade release, the Upgrade can be installed to a new or formatted HDD.
http://www.sevenforums.com/tutorials/31402-clean-install-upgrade-windows-7-version.html
Furthermore the Upgrade is migratable to another machine with qualifying OS, while an builder's OEM is locked to the hardware of the one machine.
The Upgrade can be reinstalled using the same method without ever reinstalling XP. Just keep your XP key readable and paired with the Upgrade in case reactivation should ever be elevated to a MS person, which almost never happens.
Reinstalls will never again be necessary since Win7 brings Backup Imaging to the masses. Create a Backup Image to store externally or in a primary partition and you can reimage your HDD or a replacement in 15 minutes flawlessly.
I am not sure why you say "Incorrect". The link that you refer to merely explains exactly what I was saying.
If you try to activate an upgrade edition and a full install on a
new hard drive, you will get and activation error. Thus, eliminating option 1 and 2 on this tutorial.
Option 3 depicts the work around that I was referring to in my post that is published in several places on the web by some very helpful, knowledgeable folks.
Option 3 directs the user to make registry modifications to work around this security feature. This is not something included with the Microsoft instructions. In fact, they officially recommend that you install your old OS first, then upgrade (hence my post). The work around is certainly doable but it is not the type of procedure that the average user would find "comfortable" or convenient.
As for the system builders limitations tying it to the system, that is an excellent point and one that should certainly be considered when assessing the value of that choice.
I also LOVE the imaging feature. I was going to purchase software to do just that but, like so many things with Windows 7, I don't have to purchase aftermarket software. It is included.