I wouldn't call it a "bad" sensor. Roger Clark has some interesting comparisons of IQ between the 7D and a number of other cameras, including the 5D II, 1D IV, etc. The 7D in those comparisons is actually good, captures more detail, just as much if not more light, all despite the added noise. On a size-normal basis, the 7D tends to outperform even the 1D IV until higher ISO settings.
It is not a "great" sensor, but technically and statistically speaking neither is it a "bad" sensor...it is just a middle-ground sensor that neither "wows" like the D800 nor truly sucks like a cheap P&S with a 16mp microsensor with pixels barely large enough to accommodate the wavelengths of light its supposed to be capturing. I don't think any of that actually changes your point, however... ;P
The current 18 MP Canon sensor is not particularly bad (but not good either), especially when compared with other Canon sensors.
It's rather that Canon's sensor tech lags years behind Sony that can be found e.g. in Nikon D5100/7000 or Olympus OM-D E-M5 (which is despite the smaller sensor size is as good or better than the 18MP Canons).
So when compared with Sony sensors it becomes visible that all that years passed brought no IQ improvement to Canon sensors (high ISO noise, dynamic range) and it would be particularly bad that 70D re-used the same old tech meaning 2 more years with no IQ improvement whatsoever for APS-C Canons.
Oh and I'm not wishing for more megapixels...that would be the worst thing to happen IQ wise.
I would not mind Canon using Sony sensors for APS-C bodies if they cannot keep up in sensor tech.