Okay, I solved my issue by adding an iptable entry for the return from wlan0 to eth1 (BB).
sudo iptables -A FORWARD -i wlan0 -o eth1 -j ACCEPT
Now pinging ‘8.8.8.8’ from the BB works as expected.
root@beaglebone:~# ping -I usb0 8.8.8.8
PING 8.8.8.8 (8.8.8.8) from 192.168.7.2 usb0: 56(84) bytes of data.
64 bytes from 8.8.8.8: icmp_seq=1 ttl=103 time=17.9 ms
64 bytes from 8.8.8.8: icmp_seq=2 ttl=103 time=15.8 ms
64 bytes from 8.8.8.8: icmp_seq=3 ttl=103 time=15.3 ms
64 bytes from 8.8.8.8: icmp_seq=4 ttl=103 time=15.7 m
Cheers,
Jon