Have updated the blog code so that ClearType in IE7 works. All I have done is remove the code which tells the browser what font to display and specified a font size so that the text doesn't look all tiny. And as well as looking a lot better in IE7 now, for some reason the font looks a lot better in FireFox too, so bonus!
I still have that problem where the sidebar on the right gets pushed down to the bottom of the page in FireFox, but it doesn't make the page less functional and I am hoping to fix that when Blogger releases the new version of Blogger because that has a new layout engine and a load of new templates, although I do like the one I have.