So when I first upgraded to CyanogenMod 7 on my Nook Color (again running from SD card) I was running 7.0.3. A few weeks ago the CM team released their "Release Candidate" for CM7.1. I decided to go ahead and upgrade to the newest release.
For the most part, this release has run well. I have experienced one, strange lockup where I found the nook with a black screen and I had to hard power cycle it.... however aside from that, it's run well and without issue. On the positive side... I am getting MUCH better battery life. Previously I was lucky to get two days out of a battery but now I'm seeing times closer to 2 weeks. Frankly, this is worth the occasional lockup so I have no intention of going back.
For more info on the CM7.1 release candidate, here's their blog post:
CyanogenMod-7.1.0-RC1 | CyanogenMod
I also upgraded to the latest release of the SD Card installer which is discussed here on this thread at xda.