Prompted by a discussion with Satish Mohan in my office, did a yum upgrade from Fedora 7 to rawhide a few days back and it has been surprisingly smooth sailing.
I ran into a minor problem with Network Manager and obseletes and hopped into #fedora-devel and got a confirmation that Jeremy Katz was looking into this this issue which actually turned out to be a yum problem that has been subsequently fixed. Jeremy is also doing a good amount of work testing out how well laptops are working in rawhide. Suspend/resume works very well now in my Dell D420 box and the new infinity theme and Nodoka is laid back and nice unlike the last couple of releases which were much more bold.
If you are running third party repositories you might want to enable their development branch if they one which you can find out by looking into the relevant repo file in /etc/yum.repos.d or otherwise remove those packages before attempting to perform such an upgrade. I have atleast a few other confirmations of successful upgrades using yum in fedora-devel and fedora-test lists. If you had installed Fedora 8 Test 3 before and run into a X issue soon after an update and scuttled off, you might want to test it out now since that problem has long since been resolved. This is a pretty good time for previewing Fedora 8 if ever there was one.