the 7 pound tank? do you mean ounces(as in paint ball type)? if so then yes. that is what the red sea system uses.
"The solenoid valve turns the unit off automatically, correct?" the solenoid is an electric valve that is controlled by you. you can turn it on when you want to and off when you want to. Some people have it controlled with the use of a pH controller, but I don't think it's necessary IMO. I have mine turn on 1 hour prior to my lights turning on (allows for the CO2 to build up) and turn off when my lights turn off.
and yes you do not want to run the air stone during the day. you can set it up to run at night though. The plants will give the fish way more O2 then any air pump could.
"Plus, I trust you all and don't want to set this unit up on the advice of the lfs. We all know how they can be. I'd probably end up with 5 wpg over the tank and 3 CO2 units."
We can tell that you are not someone to just jump into something head first, nor or someone who is going to take only one persons advise. (very smart) I think you are doing just fine.
EDIT: from the red sea web site:
http://www.redseafish.com/co2_pro.asp
Red Sea is pleased to introduce an exciting new CO2 system for planted aquariums.
The Pro System is a complete, efficient and user-friendly system to maintain a desired level of CO2 in planted aquariums from 10 to 125 gallons (40 to 500 Liters).
The CO2 Pro System contains the following components:
Full featured, dual gauge, safety regulator that is supplied in versions suitable for connection to standard refillable CO2 cylinders, disposable CO2 cylinders and
"Paintball” CO2 cylinders (USA only).
Independent, high precision, in-line, needle valve that can be located in a convenient location on the side of the aquarium and be set to stable flow rates as low as 4 bubbles per minute.
Highly efficient CO2 Reactor 500 that includes an adjustable flow water pump and can dissolve over 180 bubbles of CO2 per min
Bubble Counter with integrated check valve
Real time CO2 indicator
Real time CO2 indicator