Finally decided to download the IE7 beta from MSDN. I am running it side-by-side with IE6 and I see some occasional error dialogs, but not sure if they are related to the fact that I switched it to run in local mode or if they are actually bugs.
BTW, to run IE7 in local mode --
1) Download and extract (using WinZip). Do not install.
2) Delete file shlwapi.dll
3) Create an empty text file IEXPLORE.exe.local
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