I would say it's your VGA card. Do you know what type it is?
7.3 Redhat has loads of XFree86 drivers and also has both versions of X - 3 and 4 so it may well be that it supports your card a little better than 7.1
As mentioned above, do a normal install without X then once you get to a command prompt type "setup". (At least that's what I do in Redhat 7.3).
You can then start X from the command line by typing either "init 5" or "startx" at a superuser prompt.
If it fails just try adjusting the driver again and repeat the process.
Have a look at your video card and see what chip is on it (eg it could be an S3 Virge based chip). Post your answer back and I'll see if I recognise it.
Can you also detail your mouse (eg make /model / PS/2 or serial etc)?
Cheers