That's one way of doing it. If I was going to make my own installer, I would build an EXE with LabVIEW 7.1 or older, so that the runtime engine can be included. I would put my real EXE (built with modern LabVIEW) in a subfolder along with any support files (possibly the required runtime engine as well). Then zip all that and convert it to an EXE that runs my 7.1 EXE after getting extracted to a temp folder. That way there is only one EXE to the user, that they run, extracts and runs a LabVIEW EXE and runs without any runtime engines installed, and from there can install my application or other components.
Of course coding in 7.1 isn't impossible, but there are some functions that are taken for granted that I may have to code my self which were not available then. Also I'll essentially be including two run time engines. The 7.1 runtime engine was around 12MB zipped up so it won't add alot of space but still is extra code that won't be used after the install.
I've never done this approach, because it is re-inventing the wheel and supporting a tool seems like a pain, for very little added benefit.