Hi David.
You need to recompile the app on a computer running IE6, or else install IE7 on the target computer and try again. (Or redevelop the app / plugin to not use an embedded IE frame...)
Just came across a similar issue - Googled and came up with the answer. It's going to become a more prevalent problem now IE7 is getting out to developer's desktops, because most corp environment users will not know how to upgrade without having their SOE changed.
HTH
Brad