Just to get this straight, they are planning a 7-storey building but also brought plans for a 15-storey block to show that it could be worse? Sort of a threat/blackmail? Or is it the case that they're considering going taller to raise more revenue?

The 7 storey building is presumably on the Eliot Bank site. What would that do for the setting of the Horniman Museum? The clock tower there is a landmark and should remain the highest point locally.

I don't know the estate well so cannot comment on the loss of amenity or the ability of the site to cope with more residents. Although it will increase traffic on the South Circular. The idea of building private housing in order to pay for more council housing is a good one. However, it has to be managed well unlike Southwark's Elephant and Castle schemes. As land is the majority of the cost of any London development then the council (which owns the land) ought to be able to own at least half of any new homes built this way.