Hi Squeegee,
You can install Windows 8 OS in Parallels Desktop 7 for Mac.
Windows 8 will work in PD 7 but you will not have the entire functionality of the OS like Graphics, Display, etc.
We suggest you to Purchase PD 9 in which the entire functionality of Windows 8 OS is compatible.
Use a 64-bit version Windows 8 if your RAM memory is more than 4 GB else you can choose 32-bit.
Thanks,
Abdul