Shimano Deore is an excellent choice, and should have no problems on a 12-28 cassette as far as wrapping chain or clearing the big cog.

I ran a Tourney with built in hangar for over 2000 miles on my commuter bike with absolutely no problems, before replacing it with a Deore and a generic R/D hangar that Harris Cyclery sells. Shimano makes a Tourney "rapid-rise" R/D that I have thought about putting back on the commuter bike, which has bar shifters, just to see how I like it.

BTW, 7 & 8 speed have the same spacing, but the 8 speed is by nature one cog wider. A 7 speed cassette will work on a 8 or 9 freehub, but will require a spacer on the inside of the cassette. I think its a 5mm spacer. There were some early 7 speed hubs, such as the Deore LX "Parallax" freehubs that would take only 7 speed, but nothing bigger.