I’m not sure about the 7" change my guess is if it changed it would only be like 3.5 inch since it is the entire diameter of the wheel.
I’m 5’2" and without shoes have a 29" inseam.
What I did was measure my inseam without shoes (because I thought that would give me a tiny extra (for mistakes) once I put on my sneakers), then I measured the unicycle from lowest point of cranks/pedals to the length of my inseam to figure out where I would have to cut, but also very important, you have to allow (measure) for seat post space, seat space, etc especially with the adjustable seat post which is also on my 29er (I don’t like it and want to purchase a straight post to give me more ability to adjust, I just haven’t done so yet) that adds to the height of the actual place you will be sitting and is important to your placement. I hope that makes sense if not feel free to ask more questions or email me mmj180@yahoo.com with any questions.
I’m sure there are other people here who have had to do this and can add some information.
Maybe this link might help too…
http://www.unicyclist.com/forums/showthread.php?t=56041&highlight=cutting
Don’t do anything unless you are sure and really know what your doing as it could be an expensive mistake but it could be awesome too. My unicycles are adjusted and ride able with 125/150s on both the 29er and the Coker for my height with a free ride saddle, but both frames had to be cut. Unfortunately I don’t know about the new KH 36er that is why I didn’t go that route. With the beveled tube it limits where you can cut because you have to also allow for the seat post clamp and keep it safe to ride. The 29er was close if I had replaced the seat post because it would have given me about a 1/2 inch or so and I might have been able to get away without the cut but I wanted to ride, plus I don’t think it would have been quite enough.
Unfortunately KH’s as great as they are and I love them and have 3 but didn’t get a 2010 36er because of the new design, unfortunately KH is just getting further away from the shorter peeps ability to alter the ride with the larger wheels. 
I purchased a used 36er and asked so many questions before actually purchasing it to see if I’d be able to alter it enough, the answer for the KH wasn’t positive the Coker seemed to allow more alterations to the frame. I have been told the older KH without the bevel is a bit more manageable.
Whatever you decide good luck in your decision it is hard to know what to do and is intimidating to make a cut (at least for me).
Here is one of my questions when I was searching…(about half way down)
http://www.unicyclist.com/forums/showthread.php?t=66279&page=17