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While Premiere Pro will work with large still images many people that I have talked to who do it or have tried to do it seem to run into performance issues when working with larger images. So basically it can work with them but you many run into some frustration when trying to animate Pan & Zoom effects on them.
I would normally recommend using After Effects if you have it as you will normally have an easier time working with larger image formats there witha wider range of animation techniques available to you.
And for clarification there is no such thing as Premiere Pro 7. The work Pro wasn’t added to the title of the software until it was relaunched with a new Version 1. The original Premiere was a very different program, in some ways better and in some not from the current Premiere Pro iterations.