Hmm Widows 7. Okay well I did it on a vista machine the other day.
Ndis driver required thingy popped up. it searched and found driver... Installs and brings up a new connection (that uses dhcp by default IIRC)
Open networking info for connection, shove in non-dhcp hardcoded address on same subnet as one in config on device like 192.168.2.1 (kindle) and 192.168.2.2 (PC) slap in 255.255.255.0 mask no gateway - save. (echo these and other sensible setting in usbnet config)
That was all it took. Vista even found the right ndis driver which was a shocker
And I just use Nilujes USBnetworking to handle the iptables details.
note: it prefers to be "unplugged" while switching
Glad you got the majority of it squared away.