Assuming you have 2 chain whips to dis-assemble the freewheel, you can simply replace individual sprockets on the freewheel to broaden the range, or buy a custom made 7s freewheel with the gearing you need. If you PM me the details of your current 7s freewheel, and what you want to change it to, I'm sure I can help you out.
Otherwise, yes you can drop the smallest sprocket, but you'll also probably need to grind off the protruding lip on the second.
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