peregrine
you can just play the track and loop the audio output back in to an audio track.

The audio's coming from an Alesis hardware synth so the bug I mentioned isn't applicable and neither is loopback recording.
 
If a workaround is ultimately necessary, the easiest would be to copy the CC7 envelope to synth's audio track as an audio volume envelope, but the depth of the volume change will likely change.
 
But if the MIDI automation works on playback, it should work while recording. 

Just to check, have you looked in Preferences> Midi-Playback and Recording Record [tick]Controller

Thanks, Scoot.  I checked and it IS ticked.  I actually decided to record the track to WAV, and then used the Gain / Fade In feature.  It may be the Alesis.  I've had some really funky performance out of it lately.

The Fusion had a lot of problems, it was so cool in theory but kind of a doomed synth in practice. However, much to Alesis's credit, they did an update late in the product's life that fixed a lot of problems. Unfortunately, because it was comparatively late, quite a few users didn't know about it. Make sure you're updated to the lasted firmware/software as that might make a difference.

Oh! I DEFINITELY got the last update.  I bought it right after they released it, thus AFTER Alesis took that bath; which is why I got it BRAND NEW for only $850 in '07.  Full Compass was REALLY happy to finally get rid of it. However, as you say, true to Alesis' commitment of giving the customer the best bang for the $$, it has AWESOME features.  Unfortunately, they had already taken such a beating, that was the last update they did (ver. 1.24).  I still have some issues with it, like WAAY too often when I have a project which is still in MIDI form, I'll hit play, and random MIDI tracks will play random patches, until I hit play enough times to make it do right.  VERY FRUSTRATING!  Other than that, I've pretty much gotten used to it.