Is there a way to set up a rule in Outlook 2007 so that email downloaded into my outlook from gmail goes into a designated subfolder without leaving a duplicate in the main inbox?

It is possible to create a rule to redirect messages to another specified folder using parameters similar to the ones below:

Create the rule to "Apply this rule after the message Arrives",
With" ( Your E-mail Address) in the recipient's address,
Move it to " Specified folder"

This rule was tested using a personal G mail account and works.

Hope this helps