I would guess that most people wanting W7 already own XP. I don't see anything wrong with your plan provided you buy a legitimate copy of XP or Vista. My understanding is that you must actually install the old OS to use the upgrade version.
You can install the upgrade as a normal one with a registry hack, but yes, it need an already installed OS to activate. I upgraded once, now, I'm fresh installing with the registry. It saves you lot of time that having to install an OS twice.