I have been following this topic as I had the same type of error. I finally noticed that the two control signals were swapped. (pins 12 and 11). After fixing that I removed all the delays and the many displays that I tested all worked just fine with the LiquidCrystal440 without the R/W signal.
I still don't get it why connecting D7 from display to pin 7 causes the Arduino to hang. It IS specific D7 to pin 7. And on 2 different displays .
This sounds a little like what was described in this thread.http://arduino.cc/forum/index.php/topic,64256.0.htmlHas the R/W line of the LCD been tied to ground?If left floating the LCD might think it should respond to the last command and set the not busy or busy (I think it's DB7 for the flag).Redo your sketch to use pin7 and also set the led on the board to on to show the status of the program when it hangs.When the board freezes measure the voltage at pin7. If it shows high then that could be the culprit.