In practice, despite using Google's secret .ICS URL (no authentication required), and changing the URL from http to webcal, it didn't work. It seemed to work, but nothing happened and the next day the entry was gone.
This web page describes what didn't work, but the comment I'm quoting does work:
View Your Google Calendar in Outlook 2007 :: the How-To GeekComments are great. Thank you Daniel Pauly.
... I found the way to get around the 'cannot verify that the URL is a valid calendar' problem (for Google calendars, at least) was to:
1. paste the private URL for the ICS file into your browser (Firefox, in my case) location bar
2. change the http:// prefix to webcal://
3. hit enter
4. the browser should then offer to launch the external application (Outlook 2007) for you to handle this URL.
5. Follow the Outlook 2007 prompts and it should subscribe to the calendar ...
My guess is that some security fix broke the original function and Microsoft hasn't repaired it. I used IE 7 to do this (Daniel used Firefox), in my IE settings it assigns calendar handling to Outlook.
So now I can see my home calendar next to my work calendar. Not too bad, though not fabulous. Read only of course. If you sync your iPhone with Outlook 2007 this would be a good move towards work/home calendar integration.
BTW, you can't subscribe to a Microsoft Online Calendar from Google Calendar. It should work, but doesn't. Posts on this go back over a year in their Google Group. On the other hand, OS X iCal might be able to subscribe.
ICS is a lousy standard, or at least has been poorly implemented.