Your shifters must be somehow pulling too much cable. That's the only explanation that makes sense to me. Do you have another 7 speed shifter to try? I've always that, with the exception of pre 9 speed Dura ace, the cable pull of all Shimano indexing derailers is identical. Am I wrong? This is too wierd. We've got to figure it out.

I don't have a lot of experience with indexing since I'm into pre 1980 bikes, but I've built a few.

On a side note, I just finished assembling a cheap cruiser for a friend. It's one of those 7 speed freewheel bikes like they sell in department stores. I'm sure it's the cheapest rear derailer Shimano makes, but it seems to work well.