Agree totally, the tuning of 707 (the unit I demoed was broken in for 400 sth hours) is way more coloured and unnatural than the 507, which boasts a very mature, neutral tuning, possibly the most neutral amongst the Walkman series since WM1 M1. I tried it and A/B them mainly with my Just Ear and PP8. The only credit I could give 707 over the 507 is the improved dynamic swing response, which is fairly obvious on the PP8 when playing classical orchestral music, but not so much on the Just Ear.
AND........one very important thing you have brought up and I have tried to convey in my previous posts, is the size/shape issue. Everyone have their own intended usage of their DAPS, and Sony is generous enough to offer 3 different classes of quality players. For me, especially during weekdays, I need a player that appraoches top playback quality (though not necessarily GOAT level), suitably powerful (I'm not pairing it with full-sizes at all), AND I need it to be relatively light and slim in profile that I could (if I need to) slip it into my jacket pocket, as well as aestherically pleasing. The 507 have perfection written all over it for that. Plus a very admirable battery life - as I have mentioned elsewhere I can (STILL!) easily use it for nearly 20 hours if I play direct, and something like 9 - 10 hours if I have DSEE and other DSPs on (that translate to 2 days usage for me without any charging (definitely good enough now that chargers and powerbanks are everywhere) after all these years. My WM1AM2, with admittedly better sound and battery life, is reserved for weekend use.
The 707 on the other hand, as you said, is huuuuuuuuuuge, and in my eyes, ugly. Not much point really for the mid-tier offering, which I think should offer clear size and weight benefits over the top-tier offering instead of simply rolling out an inferior product to the top-tier.