No re-naming or overwriting of system or java files was required, and with Windows 7 Starter edition no playing with themes is possible so that approach was out (Windows 7 Starter is a crippled pile of junk, but that's a whole 'nother story). See for more details on the system variable aspect. I installed JRE 1.5 (her main/current version of java is JRE 6) and then added a system variable MATLAB_JAVA that directs Matlab to use the JRE 1.5 version. I was able to get Matlab 7.1 running on my wife's Windows 7 Starter laptop by installing an older version of Java than she was initially using.
This post is for any who stumble across this issue in the future or who, after all of the above detail, is still unable to get Matlab working - a situation I was in just a few minutes ago.
