Yes, it should work. I have a 95/98 game that I able to play with. I am not running it in compatibility mode though. By the way this is on a Vista system so 7 should not be munch different.
I have some older PC games written for Windows 95/98 that play fine on my Windows XP computer. I am planning on building a new Win 7 Pro machine, but wondered if these will be playable in XP Mode. They are my 5 year old's favorites and hate to lose the ability to play them with him.