7:1 compression is shamefully low. that would be one weak engine, though like the mechanic said it would definately be easy on the engine and make it last longer. but you would need the extra life to cover the extra time it would take you to tow anything anywhere.

no way in the world should you build anything with less than 9:1 compression. for a true street/strip vehicle you could go as high as 11:1 and still run pump gas (93 octane).

More compression gets you more power, no two ways about it. any dyno program you run will show a direct relationship between compression and horsepower/torque.

The only time when lower compression is better is in a boosted application such as turbo/supercharging. in that case a lower compression is good, because when the compressor kicks in it raises the compression quite a bit. example: a v8 engine running at 8:1 compression with a supercharger pushing 12 pounds of boost at max RPMs will raise the effective compression to over 17:1. This isn't bad for your engine because how often are you going to be hitting 5500+ RPMs for more than a few seconds? So in this case the lower compression of the engine gives you more room for more boost from your compressor.
But even in boosted applications it is good to keep a reasonably high compression so that the engine won't run like a dog at idle or low RPMs when the compressor isn't pushing much.