Would you ever stop an U7 taking every kick-in as a shot?

I would let him try the shot, but I would help him notice the picture before he decides. If he shoots and scores, that might genuinely have been the best option. If three defenders are in front of him and a teammate is free to the side, there is a different problem to solve. Rather than banning the shot, ask something like “What could you see before you restarted?” In training, vary where defenders and teammates start so the same restart produces different answers. Then shooting every time stops working by itself. I would not create a rule that says he must pass first. That just replaces one automatic action with another. Keep the confidence to shoot. Add the habit of looking.