I have just briefly went through the MDT and AIK documentation the other day, but haven't had time to do all the required steps.
After reading comment from Roblegge I have to agree - this user migration scenario should be available as a download-and-run tool. Sure, you'd lose the ability to add Office into the Windows image itself, or auto-installing applications. But it would be great for wide masses.
In fact, if you would run upgrade from Windows 7 DVD, it should offer two ways of upgrading. "Standard" in-place upgrade would be default (but available just for Vista), and advanced options would lead to this user state migration tool.
Imagine just popping in Windows 7 DVD on your home XP computer, it asks if you want upgrade or clean install (format), than you pick upgrade, click advanced, pick user-state-migration, and after 30 minutes you're inside Windows 7, and yet all your personal FILES are at the same place as they were before. You'd just have to reinstall your applications, which is much less time than it takes to backup&restore PERSONAL DATA..
Anyway, I'll take my time between Win7 RC and RTM to test this functionality. I am positive that it is worth the time to prepare at least for a small-office scenarios and beyond.
Oh, and good work on this to everyone involved!