Not sure if it is a bug or not in IIS 7 on Windows 64 Bit OS. We had the same question as you had ask "Where is the .NET Framework 1.1" when creating App Pools.
So we had one of our test servers reinstalled with Windows 2008 32 bit, then IIS 7.0 then .NET 1.1 , .NET 1.1 SP1 and ASP.NET 1.1 hot fix. Now this time with the 32 bit OS, the .NET Framework 1.1 framework shows up when creating App Pools in IIS 7.0.
The only difference is the 64 bit OS and 32 bit OS.
I think it should be fine to only have one App pool as long as you can assign more than one Worker Process to a single App Pool. You can verify this by creating 2 websites pointing at the ASP.NET 1.1 app pool. And make sure that you change the Max Worker Process allowed in the App Pool Advance setttings to 2 or more.
Then navigate the 2 sites and observe task manager to make sure you see 2 worker process started. W3wp.32*.exe. The 32 bit worker process.