Morning:
It's my impression most pilots are flying their multi-rotors in the "airplane" mode of their radios and if memory serves, the NAZA manual suggests this as well.
I looked at the AR7000 manual. It looks like you can wire up the NAZA to AR7000 by connecting the NAZA "U" port with the AR7000 AUX1 port. The U is the flight mode port. And NAZA X2 to the AR7000 AUX2 port. Then program your 3 position switch for flight modes - GPS, ATT and MAN.
The NAZA X2 port controls IOC, but if the DX7 only has 1 3pos switch, you can put IOC on a 2pos switch without much trouble for Normal=OFF and HOME LOCK=1. I've never used COURSE LOCK, but you should read up on it just in case you find it useful.
Other pilots can do some fancy radio programming and get the functions of another 3pos by mixing things together, but that's real man RC.
Regarding the failsafe. I read that the DX7 can do a "smart failsafe". To be honest, I don't know enough about the differences of smart failsafe and "pre-set failsafe" binds. In the manual, the smart failsafe looks like the same thing as pre-set - set the radio switches for failsafe, in the case of NAZA- throttle above 10% and failsafe switch in the failsafe position, and then complete the bind, but that's something I haven't done personally. I have a AR8000 which is pretty clear how to setup the pre-set failsafe bind.
Anyway, hope that helps.
Ron