I have the same problem with the 24" white iMac, trying to install 32 bit Win7
The only mildly successful install was with Parallels and a "new" virtual machine. Even then, the display and network drivers would not work in bridge or shared mode, so it's stuck on basic theme and no network, and it won't come back from full screen, and in Coherence mode, you only get the Win7 desktop, and can't ctrl-command back out.
When I tried to do an upgrade from a Vista virtual, it got the BSOD on the first boot after the installation, where it wants to Finish Setup. I tried Safe Mode, and got the message that it can't Finish Setup in Safe Mode. I tried to boot in low-res mode, no dice, blue screen, then it automatically rolled back on next boot.
I then tried to upgrade a bootcamped Vista Ultimate partition and got the BSOD with an error description that appeared to be display driver related, again on the first boot after the install, where it want to Finish Setup. I let it roll back, and backed up the Vista, then deleted the bootcamp partition and made a fresh full install, and the same results.
It is impossible to try and load the bootcamp drivers, because it can't get past the Finish Setup boot.
The weird part is that on installation, the display starts out in low-res, then eventually at some point switches to full 1900 x 1200 mode and does OK for the rest of the installation sequence, only to crash on the next boot.