Paul Thurrott has the answer:

I think I do have a (fairly) simple way to clean install Windows 7 with Upgrade media. That is, it should be easier than the old "install it twice" hack that I previously documented for Vista (though that should still work as well).

Put simply, the goal here is to clean install Windows 7 on a virgin, unused PC. You can boot and run Setup with the Upgrade media for Windows 7, but when you go to activate, it won't work.

Thanks to Kevin Fisher and a bit of testing, I have a simple workaround that does work.

After performing the clean install, ensure that there are no Windows Updates pending that would require a system reboot. (You'll see an orange shield icon next to Shutdown in the Start Menu if this is the case).

Then, open regedit.exe with Start Menu Search and navigate to:

HKLM/Software/Microsoft/Windows/CurrentVersion/Setup/OOBE/

Change MediaBootInstall from "1" to "0".

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