Windows Mobile 7, as with other versions is built off of Windows CE, not Windows 7. Also, there's a difference between hardware running something, and running it well enough to make it practical. What real advantage do you get from running desktop apps, made to run on a large display with a mouse and keyboard, on a device with a screen not that much larger than a business card? And if that mobile device lacks a hardware keyboard, you lose even more screen real estate.
Looking at the iPhone or Android which run POSIX-based OSes (UNIX and Linux respectively), they're still running pared-down versions of the OSes that we're run on a desktop. Even the Nokia N900's Maemo is a lighter version of Debian, although i believe it's closer to the original OS than the other two.
i think we'll see the divide in OSes between desktop and smartphones for some time to come. What i forsee are smartphones that have more robust mobile OSes, more technology (sensors, projectors, etc.) and slightly better battery life in some cases. Desktop OSes will stay on the desktop, with some exception.