This functionality is still not built in, but this tip: http://droptips.com/mount-an-iso-image-under-windows-982000xpvista does work fine on Windows 7, too!
If you do want to burn the ISO image to disc, then please see: http://droptips.com/burningwriting-an-iso-image-under-windows-7
Other posts which may be of interest..
Mount an ISO Image Under Windows 98/2000/XP/Vista
Burning/Writing an ISO Image Under Windows 7
Mount an ISO Image Under Linux
How to Create a Windows 7 System Repair Disc
No E-Mail Client in Windows 7? Where’s Windows Mail or Outlook Express?