When you use the Pen Tool in Photoshop 7, you can select "Shape Layers" or "Paths" at top (just below the word Image). If you select "Shape Layers", it can be filled with solid color or choose a style.

As for the hardness, Windows - Brushes and click on "Brush Tip Shape". Here you can adjust diameter, angle, roundness, hardness and spacing. There is a "create new brush" icon at bottom left of palette.

"Brush Tip Shape" is only one of the menus. Experiment with the other ones. You can do amazing things with the new dynamic brushes in Photoshop 7.