... it will crop the image so it appears to be closer but really isn't... in all reality. ...It outputs the exact same info it would send to ANY camera but depending on if the camera see's all of the info or not will depending on how the camera "sees" the image.
Also keep in mind given the high density of the 7D,
But that higher pixel density does result in apparent magnification. For example, if you choose FF vs. APS-C with the same pixel size/density, e.g. comparing a 200mm lens on a 5DII vs. a 20D (21 MP vs. 8 MP, but same pixel size), and take pictures of the same subject at the same distance then view them 100% on your computer monitor, that subject will be the same size in both images (although the 20D image will show less of the background). But if you do something similar with the 5DII vs. the 7D, the subject at 100% will appear much larger on your computer monitor, because that subject projected onto the 7D's sensor will cover a lot more pixels.
Actually thinking of your comparison, you are wrong in your analogy and i'll tell you why... The 20D despite having the same density will be slightly cropped than the 5D taken at the same distance and same focal length and settings... Now assuming you are shooting a 20D and 7D at the same settings... If you take that file and PRINT it as is at 8x10 for each file adjusting DPI so you are printing the full frame within the 8x10, there will NOT be any magnification, they should be the same because the SIZE of the sensor has not changed. The 7D vs 20D SHOULD show more overall detail and you could in fact take the 7d file, crop it tighter (just like additional digital cropping effect) and have a similar quality of print of a 20D vs a cropped picture from a 7D and you'll be able to see detail you couldn't see from a 20D because of size of sensor density, BUT the overall image should still be the same, you just have more detail and information to work with.
Now if you take the 7D vs 5D mII and use different lenses or compensate so they are the same perspective and relation, the image overall, printed the same way at 8x10 within the same restraints will still be the same image, no magnification. Level of detail maybe a lot closer because the effective resolutions are so similar 18mp vs 21mp and in theory you should have a hair more detail from you 21mp than the 18mp. If you do NOT correct for the Focal length effective "digital crop" then yes, you will have magnification as far as the crop is concerned.