Yes, you upgrade to Windows 8 Pro even if you have non-legit pirated version of Windows 7. I'm not encouraging piracy. I'm just stating that it's the right time to convert / upgrade your pirated copy of Windows OS to genuine one.
Here are the steps for the clean installation of Windows 8 with the Upgrade license.
- Download Windows 8 Pro Upgrade Assistant. The file is 5 MB only.
- It will scan your Windows 7 license. SLIC injection passes the test.
- Chose the digital download and make payment via Credit Cards or PayPal.
- You will get your product key after the payment.
- After downloading the setup files, you will be asked to choose how you want the OS.
- It's recommended to build an ISO file and burn it to a DVD with built in DVD burner software, if you are upgrading from Windows 7 (legit or non-legit).
- After burning the DVD, turn off your PC, and set your DVD drive as the primary drive in BIOS.
- Start the PC and the installation will start. You can format the C: drive and recreate the partition at this stage.
- Installation is automated and will take a few minutes only. Enjoy your shiny new OS after the installation.
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Remember, you don't have to backup your old Windows 7 DVD. Just backup the DVD of Windows 8 and keep your product code at the safe place. Next time, whenever you need to re-install Windows 8, just insert the Windows 8 DVD and start the installation. 
Update: The price of Windows 8 Pro upgrade has been raised from $39.99 to $199.99 after January 31st but if you are a student, you can still get Windows 8 Pro for $69.99.