Am I better off investing my money into a 4.5% yield account, or
paying principal on my 7% (fixed for 7 years) interest only 30 year
mortgage, thereby reducing the interest payments? This is the first
year of the loan (interest only) and plan on selling in 5 - 10 years.
Please assume no change in property value.

Pay off your loan.

It's no contest.

Mortgages and student loans are usually the debt that I recommend
people keep (while usually investing in tax advantaged retirement
accounts)...

But in your case, 
1) I don't think the investment would be tax advantaged
2) The interest you'd receive on the investment is very low
3) Your martgage rate will likely go up to a less than desireable %
before you sell the house

So I'm with Probo on this one, pay down the mortgage.

The money you may pay on the mortgage is not very liquid = You have to
sell the house or refinance to take the money back. Typically there is
a cost of several thousand dollars when you refinance. If you have all
the liquid assets you are likely to need the next ten years, then pay
on the principle (assuming there is no penilty for paying on the
principle)
I'm assuming that the 4.5% investment is as safe as the investment in
the house, and you can withdraw your money with little or no penity.
More likely, chances are significant that you will need a sizable
chunk of cash in the coming ten years. If so, the 4.5% investment is
the way to go. It is  generally best to not have all your eggs in one
basket = diversify in several types of investment.   Neil

Thank you for all your comments. All very good points to consider.