Here's an example file of what I'm trying to do with mode7. I'm not sure if its at all possible so i thought i'd ask 
Aurel and 
R0J0hound
Is there a way to get one object on another layer to follow another object on a layer with mode 7 applied to it?
see demo below: I'm trying to get the blue square to follow the position of the green square below it
Thanks for the help
Demo:Capx:
I had the same exact problem. Improvised it like this:
bit(DOT)ly/1vUhMHU
Its not perfect but maybe fits your need. Adjusting Y-speed of Sprite5 will do the trick