From what I understand, you can use DX lenses on the D700 but with a reduced 1.5 crop, accounting for the smaller image circle. The camera automatically detects the DX lens and crops the sensor accordingly.
>From what I understand, you can use DX lenses on the D700 but >with a reduced 1.5 crop, accounting for the smaller image >circle. The camera automatically detects the DX lens and >crops the sensor accordingly.
That's the default behavior, but you can set it to remain in FX mode. You can still use the DX lens, but won't see an image covering the entire FX frame. It will cover more than the DX crop area, allowing you to crop it as much as you want (e.g., a square crop), but anything you use outside the DX crop area will typically have poorer image quality because of the poor edge performance of most lenses.
Also note that there are a few DX lenses that will cover the full FX frame for at least a portion of their focal length range (e.g., the 12-24 and 10-24 zooms in the 18-24 range).
I just tried your method of using my 17-55mm f/2.8 AFS DX on my D700 and configuring the camera to switch automagically to DX-crop when I mount a DX lens. I haven't tried this before, but it woked fine. The 17-55 was my favourite lens when I used the D2x.
I have a D2Hs and for some things the 4MP sensor is certainly adequate. Using the DX crop on the D700 yields even a larger sensor size (5.1MP). So for high quality images that are only going to be shared electronically, printed to no larger than 8"x10" or web based applications, the FX to DX "conversion" is many times adequate.
When the grandkids come over and we are just going to be amassing a huge number of "cute" photos to share around, the 17-55mm f/2.8 AFS DX lens on the D700 works pretty slick. I've also used it that way for party/event stuff where again, it's just an email sharing or photo-book sized sharing of images.
I use my 18-200 with a D700 when I want a long zoom range, VR and ISO 6400 -- in other words, walking around night fairs and other low-light venues. I have been very satisfied with the results. Yes, I could utilize the full-frame sensor with the 28-300VR, but I don't own that lens, and do have the 18-200. My DX camera is a D200, not noted for its high ISO capabilities. Even cropped to DX size, the results from the D700 at ISO 6400 are much better than the D200 at ISO 800.
John "One should photograph objects not only for what they are but for what else they are." -- Minor White