The RAW-to-JPEG algorithms in the 7D is one of the best in any digital camera, but a decent post-process conversion (meaning anything except Dimage Viewer) is better. Even if the interpolation algorithms are good enough, you still have to have all the camera settings set correctly at exposure. The two best things about RAW are the greater bit depth (possible to "save" underexposure and get lots more detail from shadows) and the ability to do some of the settings afterwards (mainly whitebalance).
I only use JPEG when I'm fairly sure I can get correct exposure and white balance, and need to fit more pictures (I'm a bit low on flash memory, but I just ordered 4 times more...).
If I shoot RAW, I always use RAW+JPEG, usually with the "small" size for easier previewing and "everyday use". It eats a bit more memory, but that's quite cheap nowadays.