The 7D is not officially supported by Camera Raw 5.5 and DNG Converter 5.5. Only unofficial (meaning very preliminary) support for the full sized raws is currently offered in 5.5. You'll have to wait for the next official update to get full support.
And before you ask, ACR is updated 3-4 times a year and the last update was Sept I think, so do the math for when the next one is due.
ACR 5.5 and the DNG Converter 5.5 were released together and neither supports mRAW or sRAW for the 7D.
LR3B was released a few days/weeks later and is ACR 6.0 compatible so has a slightly less immature processing for the 7D.
ACR 5.6 and LR 2.6 should fully support the 7D, both with the suite of camera profiles and the various RAW format sizes.
I don't think you can make LR3B create DNGs of mRAWs and sRAWs that will be readable by ACR 5.5, either.
I experimented with LR3B and the 7D's mRAW and sRAW and they didn’t' really seem better than a resized-down version of a regular RAW to me and once LR3 can do luminance NR, I'd almost think it'll be better than using mRAW or sRAW as a lower-noise format, although those will still take up less space on a CF card and be useful that way.
So there are only twos ways currently to convert thos med&small files and that is DPP or LR3, correct
As far as Adobe and camera-manufacturer programs, yes.
LR3B is the least different from ACR 5.6, especially if you use Develop / Settings / Process 1.