I have the KT7A-R version so, I'm not too sure about the KT7, however:
Yes, you should be able to use the CPU on the board, although, it isn't designed to run at the Axia's 266mhz clock speed since the KT7 is for 100mhz FSB's. The version of the Abit you should use is the KT7A (preferably Rev. 2). This is designed around using a 133mhz FSB.
I may be off-base though. Anyone else?
-Christopher