That commenting works great. In particular, one could use:
<!—[if IE gte IE 7]> <!—>
as the new initial comment just before the nested object. This limits the comments’ effect to only IE 5, 5.5, and 6 (assuming it fails in IE4, I did not test it :) and lets IE7 work properly on its own (ignoring the second object element that it does not understand).