It is supported, why should Steinberg publish it if it was not supported?
(read all the remarks down to the bottom of the document)
Watch the remarks in Cubase 8.5 version history document (“known issues”), there’s additional hints for all 8.x versions when it will not work in 7.x:
(search for 13779)
When opening projects in older versions, you should know exactly all the feature differences and logically avoid these. If you use for example Magneto in the channel strip in 8.x, it will open correctly in 7.5.x, but not in 7.x (because it wasn’t available then). Same is valid for any renovated / added plugins.
Other way around: If you avoid internal plugins, any usage of the channel strip, VCA automation and Track Versions, Cubase 8.x projects should open fine in any older version.
But as you can run any older version with your new license, it makes much more sense to get the old install dvd and install the older version on your computer, too. Different version can exist in parallel on the same PC/Mac. Ask support if you need an ISO file, they’ll help you.