Cool - I stand corrected, and danr certainly knows better than I; I was just speculating based on other Win95 applications I've tried. =) I'm actually really surprised to hear KS works on Win7 64-bit.
Agreed about the benefits - unfortunately when I played it back in the day (I own a copy), it never did work exactly right. I remember getting frustrated after discovering I wasn't seeing all the backgrounds (nebulas, planets, etc.) in Wing Commander I and couldn't find a fix.