Quoted:
1) for a pistol, would you even recommend using a piston build?
No.
2) what piston system would you recommend?
The one Gene Stoner built into the bolt carrier.
3) besides milling out the 80% lower, would i need any for work on the lower to insure a tight fit to an upper?
It's all in the radius at the back of the lower where the lug from the upper fits in.
4) are all uppers recievers the same? that kind of recoil buffer tube would be ideal for a piston setup?
Define "are they all the same"? As far as fit, quality, or what?
Just use a full length pistol tube not one of the reduced length systems.
5) 1/7 twist would be ideal for a short 7.5"-10" barrel right?
Not really, all depends on what you are shooting. Twist rate is twist rate, barrel length is almost meaningless.
If you want a recommendation on what to put together that will likely run well, just get a quality 11.5" barrel and run it with a full length pistol buffer tube, and probably an H buffer.
Here's a similar thread of someone building an SBR, but the barrel length question would be the same as for a pistol.
http://www.ar15.com/forums/topic.html?b=6&f=51&t=344937