Would the install of Windows 7 Pro affect my recover partition?
Yes, you will no longer be able to trigger a recovery from that partition using the manufacturer bios keystroke (F11 on a HP)
How does the recovery partition work (how does my system know it is a recovery partition, is it embedded within the windows install or does the partition have some kind of bootstrap)?
Yes it is part of the Custom Master Boot record, when you install W7 (or any other windows OS) from a regular install disc it overwrites the factory custom MBR, breaking the F11 function on a HP, it will break other manufacturers methods also. It can break other bios keystroke functions also, depends on the manufacturer and how they customized their MBR.
Recovery partition is a bootable partition, the recovery process allows the system to boot into that partition rather than the OS partition.
There are work around's for getting the recovery partition to work after the MBR has been changed, it involves marking the recovery partition as "Active" then reboot the PC, it should then boot into the recovery partition, It works on HP's, not sure about other Manufacturers, but it will recover the system back to the original OS from the factory.
Some Manufacturers allow you to make a set of Recovery discs right on the PC, I suggest you investigate this and make them before you install the other OS. These will allow you to restore the PC to exactly like it was when new, custom MBR and all partitions.
Advice, use the Windows Anytime upgrade, this will convert the Home to Pro in minutes without re-install, and will not damage the MBR, be sure to record your anytime upgrade key some place safe, you will need it if you ever recover the PC, as this upgrade will not change the recovery partition to a pro version, you will have to upgrade it again after recovery.