I would think so, yes...
I flashed the update via TWRP... having made a nandroid backup of my current MoDaCo CM 10.1 (JellyBean 4.2.1) based installation first.
Having spent some time with 4.2.2, I then restored that backup without problems. (Although I had to fastboot flash TWRP again - the update wiped it out).
The only 'permanent' (for want of a better word) aspect of the Nexus 7 that the update changes is the bootloader - upgrading from 4.13 to 4.18.
So, yes... flashing 4.2.1 ROMs shouldn't be a problem.