I received an email back from Google.
The Nexus 7 does not support 4-pole headphones with a microphone.
A replacement device will be provided and your original device will be inspected if you elect to send it in for warranty replacement.
RETURN YOUR ORIGINAL DEVICE
You’ll need to return your original device to our service center. Additional charges for the full price of the device will be incurred if our service center doesn’t receive your original device within 21 days of your replacement delivery."
I added the extra few lines just so people don't think I'm making stuff up about the email. It's a genuine response from Google.
This kinda sucks! I can see why they haven't included support for a microphone as you can't make voice calls, and I guess they expect people will use skype with the built in mic.
But if you're outside and want the mic to be closer whilst skyping then you're screwed!
I needed the mic input for using a Multitrack audio recording app.
Still, if I can get the usb mic to work then I'll be happy.