Ha!
Worked it out. Changed:
Dim oItem As New CuteEditor.RichListItem()
oItem.Text = "Test Item"
oItem.Value = "Code Snipet"
oList.Items.Add(oItem)
to:
oList.Items.Add("Test Item", "Code Snipet")
Don't know why this should make a difference specifically for IE7, but it looks like it works. No JavaScript error, and code inserted correctly.
Many Thanks,
Ady