Quoted:

Bullet disintegration is mostly with the very light ~40gr type varmint bullets.  I've seen it myself with hot loaded 40gr bullets.

In the M16A2 development program, when they went from 1:8 to 1:7 twist to try to get their M856 tracer to meet a particular spec, they found that M193 would no longer meet accuracy specs.  Instead of trying something intermediate, that failure was deemed to be acceptable.

Many years ago, Colt changed out a whole bunch of 1:7 rifles (to 1:9) that had been delivered to NYPD which wouldn't perform adequately with their chosen lighter weight duty load.

Yes, very high quality "match" projectiles will do better with excessive stabilization than will lower grade projectiles.

Excessive twist rate exacerbates any flaws or eccentricities in the projectile or other factors.  It also increases downrange BC since the bullet is less able to follow it's trajectory, so very long range ballistics suffers.  The faster you go in twist, the more likely you are to see detrimental effects, which is why high precision shooters tend to shoot the slowest twist that will adequately stabilize their bullets.

There's a lot of discussion in this archive thread which explains some of the intricacies of external ballistics.  Let's just say that the often repeated mantra of "no downside to excessive twist" is not exactly correct.
http://www.ar15.com/forums/t_1_5/1578254__ARCHIVED_THREAD____Bullets_accurate_at_600yd_but_not_100yd_.html&page=1

Personally I found 1:7s to be somewhat annoying, where I'd shoot many donut looking groups but could never seem to get bullets in the center of a group, particularly at shorter ranges.  The information in the thread I just linked explains why that happens.  I notice much less of that with 1:8 and 1:9 barrels.  I've been very happy with 1:8s.  That's just my anecdotal experience.

Frankly I really don't know why you'd want to shoot 77gr match loads out of a 7.5 inch barrel.  Then again I don't know why folks want 7.5" barrels in 223/5.56 to begin with.