As a total newby, I'm curious: if you are flying a 1/7th scale plane at an indicated air speed of 35 mph in the sim, does that mean that it is the same as a full scale plane flying 7 times that speed? 35x7=245 mph?

No and Yes! The indicated airspeed is not a scaled down representation. It isthe actualreal world speed. However, if you want to run the rabbit deep enough, then yes, 35mph in a 1/7 scale plane would be the "relative" equivilent of 245mph in the full scale version.
This is where it gets interesting in the modeling world.
Consider my .40 sizedP-51 Mustang, which is about 1/5 scale of the real thing. It will stall around 20mph. Scale this up to full size and you would have a P-51 with a stall speed of 75 to 100mph, which is not representative of the realplane. Point being, it is easier to keep true scale performance in larger models.</p>