This is definitely one of my main concerns, but from what I understand, zeroing in on the middle cog of the 7-speed should allow for a total of .6mm of difference on the two cogs at the extremities. I don't know if the whole mechanism has enough latitude to compensate. That's what I'll try first. Plus, I understand that there will be an extra "click" on the shifter - I'll position that extra one one outboard side of the freewheel, away from the spokes. I'm assuming that proper adjustment of the derailleur travel will also keep the chain on the freewheel.

Additionally (and correct me if I'm wrong here), the original freewheel on this frame was a 6-speed and the 7-speed freewheel has been installed. That's the max that a 126mm hub can take from what I understand. Going to an 8-speed hub would push things into the 130mm spacing. As I mentioned earlier, the actual dropout spacing measures 128mm, so if I had to go to a new set of wheels with an 8-speed cassette, I should be able to squeeze it in without doing a cold set.

Mostly, I'm doing all this to learn a bit more about this stuff as well as to make the shifting as smooth as possible. I already have done this to another old bike, but I used the basic Shimano Tourney 7-speed shifters (which are OK, but not as nice as the 8-speed shifters).

Again, thanks for the responses.