Can a 7 speed torpedo cable index a modern day 7 speed freewheel? I have an old cable from a 7 speed Torpedo internal hub and am wondering if it will properly index a modern day 7 speed freewheel or if it is way off.  Is there an easy way to check this?  Just measure how far the cable moves in it vs. how far the cable moves is my twist (grip) shifter 7 speed?
You've answered your own question.  It all comes down to cable pull, so use an accurate measuring tool like a vernier caliper, and see exactly how much cable is pulled per click.  Use a dot of white-out ("twink") to help measure accurately.

The cable itself is quite irrelevant, its the shifter on the handlebar that does the stepping, and the deraileur has a multiplier ratio.

There's a great table at http://blog.artscyclery.com/science-behind-the-magic/science-behind-the-magic-drivetrain-compatibility/  but it doesn't list IGHs.

Shifter cable pull (mm) * Derailleur shift ratio  =  Cog pitch(mm)


So if your cable pull was 2.9mm per click, and the 7 speed RD mech had a 1.7:1 ratio then it should fit a 7 speed cassette/freewheel with the standard pitch of 5.0 mm