First, I think you should ask yourself what you want out of an RPG-7. For me, I want historical accuracy. If I can't make it historically accurate, I might as well build a rocket launcher of my own design. If you don't care about historical accuracy, just make something safe and fun.
I would be surprised if you could make anatomically correct (or mostly so) PG7's for less than $75 to $100 (per projectile). There is an awful lot going on there. Then, after you get your anatomically correct motor built, you need to put it next to your head and shoot it. I don't know about you, but I'd want to test fire it a few times off of a bench before I shot it off my shoulder. I'm doing an RPG2, and my cost per round will probably be $50 to $70, and that's a lot more simple than a PG7. I will probably try to make cheaper, non-authentic practice projectile for it.
Once upon a time, I had an RPG7 and a sub caliber rifle/projectile for it. It was basically a bolt action rifle that looked like a rocket. It was really cool, and had some neat features. If I had an RPG7 now, I probably wouldn't try to build projectiles for it, but I would make a rifle that looks like a rocket to shoot tracer rounds. I'll probably make one for my RPG2 eventually.
DDs are fun. Build something and post pics.