In order to take advantage of USB host Mode on the Nexus 7 (Android 4.1.1) is it necessary to have an OTG cable? Can I do it using the standard micro to male cable, then use a female to female adapter?
Yes, you need a specific OTG cable, or you need to modify your cable. An OTG cable has pins 4 and 5 shorted, which is how Android knows it needs to switch over to host mode. You can manually short (cross) the wires on a standard cable, then use a f-f adapter.
For my Nook Simple Touch, a kernel patch is needed to be able to use OTG. I also need to manually activate Host mode while using a OTG cable, so I know the grounding of pins 4 and 5 do more than simply tell Android to go into host mode.