I think they are showing dogs larger than 7 pounds too - just from observations. Not as much as a few years ago, but I still see them in the ring.
When I was showing Camille and finally asked the judge, after a show, what we were doing wrong and she simply replied that my dog was a beauty and she really wanted to put her up, but just couldn't waste the points on a dog that could not be bred - We were living in Florida then and it was at the Tampa show when I finally got some backboned and respectfully asked. After I thought about it - it really made sense.
This was in the early 90's.
T.