Installing Mountain Lion into P7.0.15104. It seems to be working but it's been taking a very long time; either that or it's stalled at the Apple boot screen. Anyone have experience with how long it takes?
Turns out it wasn't doing anything. Per this discussion: http://forum.parallels.com/showthread.php?t=258995, I upped the settings: 2 cpus, 3gb ram and 128 for vram. It's installing now, will update if I have any more problems.