I had this same problem. I had my son take the PreAlg test first, after looking at it, I thought he would have no problem. Well, he freaked out that it was a "PreAlgebra" test, and did miserably, said he couldn't even answer half the questions. :(. So then I had him take the 7th test and put white-out over the "7th" label, so he had no idea it was a 7th grade test. He aced it. I thought that the placement tests for the two very very similiar. So I am thinking that it wasn't that he couldn't do the PreAlgebra test, but more he "THOUGHT" he couldn't do it.
So then I saw TT at our local homeschool convention. I placed 7 and Prealg side by side with the table of contents open. Most of the chapters were the exact same, but the order was ever-so-slightly different. And then the last 2-3 chapters were different. So at that I point, I was thinking go right into PreAlg
Then I got home and did a online chat with TT customer service. I asked what the difference was. She did say that Math 7 covers a little more geometry whereas PreAlg dives more into Algebra (must be these last few chapters).
So now I am pretty sure we will do Math 7. Here are my reasons, although there will probably be heavy review/repeat in PreAlg the following year, I am thinking the actual problems will be slightly more advanced. Two, I am going with this curriculum so that I do not have to be involved with Math as much (as it is my weak subject, especially as we get into th ehigher levels, plus this is my first year with HSing my K son), so I want to make sure that he is comfortable, not pressured/stressed, with Math. So I fear that with PreAlg, it might be too much at certain times for him, thereby requiring me to jump in more than I am hoping to. Third, I think that if he thinks certain parts are "too easy" then that will be a confidence booster for him, since I do feel as we get into these higher grade levels (doing 5th this year), there will be certain subjects that he is going to struggle, ie composition, so to have others that are deemed easy, will create a balance for him. Fourth, he is already going to be 2 grade levels ahead in math, as it just comes naturally to him, so I do not feel any pressure to skip him ahead THAT much just because he might be able to do the work.
So it will be Math 7 for us. In the end, when he moves to PreAlg, it might be too much review, thereby a waste of money, but the resale value of TT is so good, it won't be that much $$ wasted for the benefits of going with Math 7.
hth
K