No, Parallels 7 does not work... Almost does... As the icons for dictate seem to being working The dictation icon is not at the cursor like it should be and of course, when it id done, there is no text to be found anywhere. I bet it is somr buffer awaiting the right software tweak. Tech support suggested that version 8 may have it... Though I am betting it happens soon ( that's a little longer than real soon now).
Meanwhile, you can dictate into the Mac side into a text file, and copy and then paste into the Windows side into anyplace you want. A little awkward, but it does help a lot.