Funny, I actually just watched that episode last night, and I forgot how much I loved it. I'm re-watching S7 right now, and I'm thinking I might be re-adjusting my ideas about it. It's always been my opinion that 7 has been my least favorite season - but then I thought about it for a while and really, the only aspects of it I dislike are the Potentials and Kennedy. I love the mini Wood/Spike arc, the focus on Spike's past, the First Evil, and the emphasis on Buffy and Spike's evolving friendship. I love the theme of girl power and creating an army of Slayers.
Sure, I agree that they tried to cram way too much story in one season, but hey, give them a break. There was obviously quite a bit that the writers wanted to explore before the show ended. Some of my favorite episodes are in this season; "Lies my parents told me, "Selfless", "Him", Conversations with Dead people", and "Dirty Girls". So yeah. I'm appreciating the season more and more was I watch it yet again.