The tethering for 4.2.1 works. I used Nexus Root Toolkit from this post to complete the unlocking and rooting
Then I used the same tool to flash the zip.
The annoying step was how to install windows driver so your windows can recognize your N7. It took me 30 minutes to figure out then the rest was like breeze.
I am now on 4.2.1 with tethering enabled and I got an OTA update downloaded for 4.2.2. Will wait until 4.2.2 tethering is ready then I will upgrade.
Also in terms of upgrading to 4.2.2, someone else has an easy step
1. install Voodoo OTA RooterKeeper (I installed version 2.0.3)
2. create a su backup
3. click on Temp. un-root
4. install the OTA upgrade
5. once upgrade is done go back to Voodoo and restore root
Then your N7 will be rooted again (and then you'll just be like me to wait for 4.2.2 tethering zip)