hmmhm. Interesting discussion in many ways. I do have to admit that the motivation for microsoft to release a new version of IE is a bit unclear to me - especially when recalling their previous decision to "abandon" IE 6.
It's clear to me that there is no need to justify improving a product and releasing a new version. But the thought that this process of creating a new version might have begun a lot later or maybe might not have begun at all without firefox gaining such a tremendous amount of popularity crossed my mind, too.
If we just look at the outcome, though, all we get is not one cool browser but two (printing in IE7 and its blazingly fast rendering of heavy jscript sites rock quite a bit). Looks like a win.
It's just interesting to speculate if at the root of it all sits a strategic business decision. Maybe the details aren't pure glory.. but the outcome is.