I think you actually did a heck of a job processing that image. Underexposure happens in the field...the animals often decide the light, not you. It's not an airshow where you can predictably track targets. That said, IMHO, it's easier to fix the sky in Lightroom than it is to recover detail from shadows on the 7D, so I try not to underexpose BIF. This is why the dynamic range on the new Sony Sensors would be amazing for wildlife.
Well, you can't fix blown. Blown is blown. One of the major drawbacks of digital technology, really.
I guess I might have gained another 1/3-1/2 stop out of the sky, but I don't think there was much left before I ran into the point where it started blocking up in that 250-255 level range (or equivalent 14-bit values). The problem with pushing ETTR too far is that once the first color channel hits 255, the rest block up on that and even if they themselves don't clip, you end up with that flat color, and odd transitions to the 240-250 level range.
And to mess with exposure to maximize ETTR, I'd have had to have taken my attention off the bird, which was already on the move. I usually meter off the sky up 30° above the horizon, push exposure until the histogram is well into the rightmost zone, and go from there. This is one of the reasons I would LOVE for Canon to add a histogram to their Transmissive LCD in the OVF. If I could quickly switch to a histogram display in the VF, I could make the finer adjustments for fixing that kind of thing without having to take my eye off the ball. I could probably even train myself to deal with that kind of thing "procedurally" so I don't even need to really shift my mental focus, and keep it on maintaining ideal tracking. So many things Canon could do with their Transmissive LCD OVF technology...
That said, there's something about the 7D that I just don't like for birds in flight. I think it might have something to do with that waxy AA filter look. Sometimes, when everything goes right, I'm blown away by the results. But more often than not, things are just slightly "off".
That is one thing I do indeed agree with you about. The 7D does have a faint "waxy" look to it, particularly at higher ISOs. I think that is actually more due to the low max saturation levels than to the AA filter, or perhaps the two working in concert. The 7D only has ~20,000e- at ISO 100 FWC. That is really low. When you get into higher ISOs, that really hurts color fidelity, which I think is part of that "waxy" look. The AA filter is certainly strong, but that is easy to combat with some unsharp masking...but the color fidelity...that's pretty tough to do anything about. In contrast, the SoNikon 24mp sensors have ~27,000e- FWC, which preserves more color fidelity at higher ISO settings, but FF sensors really can't be beat for higher ISO color fidelity...their SNR's are double or more what you get even from the better APS-C sensors. I think this is one of the things that makes the 1D X so exceptional at high ISO...it's monster pixels support a very high SNR and richer color fidelity.