The N7's headset jack is made for a headset WITH a microphone. Iphone and Android cell phone headsets work fine.
I have a wired head set with an inline microphone and it works great on the N7 no problem. It's the same headset I use with my Galaxy S2 phone. I have Groove IP installed on my N7 and use the headset to make voice phone calls. My G/F says she hears me fine on it. And I hear her clearly. So I can verify that a standard cell phone headset with microphone will work.
BUT what won't work is a standard headset WITHOUT the microphone. You might not even be able to hear the sound. This is because even though the plug is 3.5mm, it is different from a 3.5mm plug WITH the microphone. It has three contacts (left, right, and ground) and the plug with a microphone has four contacts (left, right, microphone, and ground). So the plug on a standard headset without mic. will not match up with the contacts inside the jack of the N7 causing distorted or no sound.