Originally Posted by oppy
info on reverting back to stock (1.2 I believe). Once you're there, you should be able to update to 1.3 and then do a ManualNooter. There's tons of info over at XDA.
So, I guess the short answer, at least afaik, is "yes" - you need to uninstall CM7 and go back to stock.
My bad. I googled the answer and am in the process of doing it now.