Interesting question. Strictly speaking, iCould is a web based service but the iCould Control Panel is not. You can, of course, install it on the Win7 partition and leave your music on XP but there are two points to consider.
1) The music you have on your XP will not benefit from iTunes Match or iTunes in the Cloud.
2) You may have to have iTunes installed on Win7 as a prequisite for installing iCould Control Panel but I am not 100% on this. It does not mean that you have to use iTunes in Win7.
I don't know what you are doing to need both OS's but, for what it is worth, here is what I would do in your case. I would install iTunes on Win7 then copy your library from XP as well as your pictures folder. Then I would install iCloud Control Panel on both Win7 and XP. The benefit is, of course, than you can keep your two partitions more or less up to date. Further, when and if you decide to migrate to Win7 permenantly, at least the apple stuff you wouldn't have to worry about migrating.
Admittedly, that is more work but short of migrating exclusively to Win7, that is the only way I can think of te really utilize iCloud to its full potential. Again, it is up to you to determine which features you want and how badly you want them.