"I love the handling of the K7 but I find the noise a bit of an issue. I find noise becomes apparent st ISO 200, which is the setting I use the most because the D-range setting does not work at ISO 100."
Same story here. The K-7 dynamic range isn't good enough so I also run it at iso200 so as I use the DR expansion all the time. Processing a photo shot the other day at iso200 where the sky was flat produced unacceptable noise. Disappointing.

Reminds me of my old Spotmatic so it looks good to me. Of course it would need a silver Limited lens mounted on it.

I bought one but it was a dog wide open - blur from corner to corner. My Sigma 17-70 ate it for breakfast. Admittedly the 17-70 was f3.5 wide open at 30mm but this is comparing a consumer grade zoom with a supposedly Pro grade prime. If it's unusable at f1.4 why would you bother with the lens.

I had an *istD before the K-7.
There are lots of good things about the K-7 such as faster start up, better AF, Shake Reduction, much better WB etc.
On the down side (& I've been criticised before for saying this) the image quality isn't the K-7 high point. It's noisy & for 14MP v 6MP the image detail is less than overwhelming.
Do I like my K-7. I love it but wish the sensor was better - the K-5 sounds nice but I won't be upgrading in a hurry. After all I didn't replace the *istD in a hurry either. The major factor that got me thinking about a new camera was travel photography where the *istD was painfully slow to wake up, focus & shoot - by then the moment was gone. Apart from that the *istD was surprisingly good.

"I find it quite amazing that when the K7 was launched is was regarded as a good camera, all of a sudden the K5 comes along and the K7 takes a bit of a slating."

I've said before on this forum that the K-7 sensor is not a great one & that was long before the advent of the K-5.

I would go for the Pentax FA50 f1.4 as long as you realise that wide open it's not brilliant. It's OK at 1.4 but gets better (very good) as you stop down to 4 or 5.6. I like the lens & it useful as a short (& fast) telephoto on an APS-C camera. On my K-7 it's equivalent to a 75mm lens on a film camera so it's great for portraits amongst other things.

I picked mine up second hand on ebay & was very disappointed with it until I removed the skylight filter that came attached to the lens.

The K-7 is not a stellar performer but it should be better than you're apparently seeing. Remember the P&S cameras apply a lot of processing automatically to get the result you see. With a DSLR like the K-7 it's up to you how much processing you do & how you want the image to look. Don't think that as you've bought a good camera it will do it all for you. On the contrary, it's much more up to you.

First of all I would shoot in RAW (my preference is for PEF but DNG will do just as well). Then process your photo as a PEF (or DNG) file which gives the maximum latitude & will yield the best results. Then when all processing is done save for printing as a jpg file.

Having said I shoot in RAW as PEF files on the weekend I attended a dance rehearsal where I started shooting in RAW but decided to change to jpg. BIG mistake. The jpg's were nowhere near as good as the PEF files. Of course if I set my in camera processing to get the best out of jpg files I might have been happier but the plain fact is that the jpg files just didn't come up as well.

If you'[re worried about processing all these RAW files & converting to jpg I have found that the "Process Multiple Files' command in Pentax Digital Camera Utility 4 does an excellent job of bulk conversion producing pleasing results with minimum input from me.

The K-7 sensor is not the best in the world by a long shot but it can still produce good results if you are prepared to do the post production work.
I shoot in RAW & process as a PEF file before saving as a jpg. This allows me to get the maximum out of my image editing.

As a matter of interest I attended a dance rehearsal on the weekend shooting some in PEF before shooting in jpg on standard sharpness, contrast etc. I was overwhelmingly disappointed with the jpg's - wish I had shot all in RAW. Big mistake - I won't do that again.

The "Process Multiple Files" conversion from PEF to jpg in Pentax Digital Camera Utility 4 does an excellent job of mass conversion with pleasing results.

link
DxOMark does not give the K-7 sensor a good rating as it's behind (in ascending order) the Km, K200D, K20D, K10D, K-r, K-x & the K-5 (which is the standout performer. However, if it's any consolation, it's ahead of the Leica M8!
Even though the K-7 sensor drags the chain in these tests & (as it does in my experience also) is not a great sensor it's not THAT bad so there must be something wrong. It will be interesting to see some samples (with the EXIF data).

Didja see this? link Makes me want one.