A browser is simply a processor of web objects and does what's asked of it while visiting a website.  Thankfully IE 7 has far better security than version 6.  This potential issue is minor and would be used for phishing attacks primarily.  In my own testing, this did not work in IE 7, Firefox 3.0a, or Opera 9.02.  Still, folks always need to be careful when visiting websites as no browser can protect you from all the risks out there.

ISC: IE 7 - Popup Address Bar Spoofing Vulnerability
http://www.incidents.org/diary.php?storyid=1804

Secunia
http://secunia.com/advisories/22542/

Browser Test Site for this new issue
http://secunia.com/internet_explorer_7_popup_address_bar_spoofing_test/