The trick for challenge in level 7 is that you need not just a shield. For better survival max out your shield and wield medieval helmet outfit which gives you 500 hp. This should prevent you from instant death and allow you to take a few hits regardlessly. ( This may be a bug as well.)
Good game. My tactic was: I was going for full attack each time I've cleared certain rooms. It's worth to make all of these before facing boss as your stats will go higher. If full strength then use axe or blade. Sword is balanced and dagger is fastest weapon with best critical rate. Oh and it's worth going back to cleared rooms to kill fiends and ghosts for potions in case you're badly hurt or you have under 75% health before going to red doors (boss). If you ever find it useful rate it up ^_^
I beat this game in that way: conquer Grouzeno, set intelligence to 60, master art of war (and patriotism if you're Forest Guy!) and these Great Heroes with 2800 hp and dealing 500-700 dmg will capture the cities in no time. Check it up by yourself!