Sugar fine is exactly what I was going to recommend.
If the crushed coral is in fact that small it will be fine, you will just have to make it deeper say 6''+. I could not answer for sure if 7g tank would be big enough. It is probably skating on the border. Is the 7g already set up and in use? If not then you should go bigger.
Also it really depends on what you want out of your fuge. If you want denitrification and nothing else, or very little else, then a 7g may work. If you want a DSB, macro, LR, and an actuall "refugium" for all the little critters, then I would go with a bigger tank.
I have a 75g DT w/ a 30g fuge. (just a big section of a 55g I made into a sump/fuge). It has 3'' of sugar fine sand (for denitrification) under 4'' of aragonite (mostly for pods). And I still have room. It has a footprint of 30''x12'' and I have seen 0ppm nitrate for years. I should mention I have a pretty big bio-load and crappy skimmer.
So basicaly if you are not commited to the 7g, I would go bigger.