IE7 offered for installation after running a manual scan at Microsoft Update
I haven't seen IE7 offered via "automatic update" on any of my non-WSUS managed machines yet, but IE7 was offered on a machine on which I conducted a manual scan via Microsoft Update.
This may explain the reports in the support newsgroups that IE7 was being offered via "automatic updates" within days of IE7 being released (when all information was that IE7 was not available via AU yet). Automatic Updates (the automatic scan) is not the same as going to the Microsoft/Windows Update sites and running a manual scan.