Recent versions of AutoCAD have provided the best way to mask the content under mtext objects.  Unlike all other approaches, the built-in functionality grows/shrinks with the mtext content.  To control the mask, make sure your Properties dialog is displayed (command PROPS) then select your mtext.

In the PROPS dialog you will see Background Mask, click the […] button to bring up a dialog where you can toggle the status as well as control the size, color, etc.  Note that in AutoCAD 2007 you can only turn the mask on/off.

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