I think it's too stiff of a laydown. Even though the button could very well have a 7, there are a number of other hands he could have since he's a loose player, from TT-QQ to a 9 to just overcards and/or a draw, to maybe even a pure bluff (if he read you as trying to buy the pot). I think you can rule out 97, 99, and 77 b/c he would slowplay if he flopped a boat I imagine. Many players will also slowplay when they hit a set with a pair on the board, so if he had a tendency to do that, then you could read his raise as meaning he doesn't have a 7. With that much money in the pot on the flop, you have to be pretty damn sure his $100 raise means he has a set of 7's to make that laydown.