@AL302 - first suggestion is to chill, its probably not as bad as you think (although I know it feels like it at the time).
I happened to be doing another (mid-2011) MacBook Air today and got your exact same problem. Its been a few days so you may have already found a solution. For me it was as simple as forcing it to boot from the USB BootCamp created. The problem for me was that it was trying to boot from the newly created and formatted partition (which has nothing on it).
To fix, I went through these steps:
1) power off
2) make sure your USB that BootCamp created is in one of the ports
3) power on while holding down the option key
4) You will see the Mac OSX HD (whatever you named it) and the USB with BootCamp/Windows on it (may say WINSTALL or something similar... the USB icon is the giveaway it is the right one) as selectable, use the arrows to move to the USB and press enter.
5) It should then boot from the USB, and you will see a message briefly saying something like "Booting from BootCamp created install..." or something like that.
6) From there it will run the rest of the process to install Windows 7
The other thing I noticed after completing the Windows 7 installation this way was that the Apple specific drivers/utilities had not been installed. To fix this, with the USB still mounted (you may have to remove it and plug it in again for Windows to recognise it) is to open the BootCamp folder on the USB, and run SETUP.EXE from there, it will guide you through adding all the Apple specific drivers.
Hope this helps!
UPDATE: Just noticed you said you were installing from Win7 DVD... you should be able to following the same steps, only at the point where you see the HD and USB icons, you should see the Win7 DVD (if it is in the SuperDrive), and it should run from there. Another option you can do is start up while holding down "C" key - that used to be the old way to get them to boot of the CD drive (as it was then) but now DVD.
Good Luck!
Message was edited by: elddum