I compare 100% crops to 100% crops. By your logic, if I were upgrading from a 3mp camera I should limit myself to looking at the 7D images zoomed out to the same size as the 3mp images. A bad lens may look good when used on the 3mp camera, but may have noticeable problems when used on the 7D (when viewed at 100%)
Yes, but the bad lens will look EXACTLY THE SAME when used on the 7D if you view at the same size as the 3MP camera. On the other hand, yes, of course it will look worse when viewed at 100%, because you are looking at an image that is physically 2.5x larger in each dimension! This is totally obvious. This is not a technology issue - the lens looks worse because you are viewing the same thing at a larger size.
My point is: "who cares"? Why compare 100% crops to 100% crops? We are not talking about rocket science here.. the 7D images at 100% are physically larger than lower resolution images at 100%, so of course the blur and lens flaws are larger, as well. I think we are on the same page, but if you frame the picture of a bird on a 10MP APS-C sensor exactly the same way as you frame the picture on an 18MP APS-C sensor, and you print both photos out at the same size, then the sharpness, the blur, the DOF, etc., are all exactly the same.
Now, if you personally have decided that because of the extra resolution, you are going to crop more aggressively and therefore enlarge the photo more than the 10MP sensor, that's great. Congratulations. But that is your personal decision, not a limitation of the camera or the technology! Of course the decision to crop and enlarge will lead to enlargement of flaws in the picture. The exact same thing would happen if you cropped the same physical area of the frame on the 10MP camera also.
I don't know about you but I generally crop my photos and a higher res camera gives more cropping ability. So, yes it is a problem in real life, since in real life people crop their images.
If you think that just because you have 80% more pixels, you can crop 80%, then enlarge 80% more, and get the same quality image as uncropped on a lower resolution camera, you are deluding yourself. The resolution does not change the optical and physical properties of your image. When cropping and enlarging, You are enlarging artifacts stemming from imperfections in your lens. You are enlarging camera shake. You are enlarging subject motion blur. Etc. The extra pixels don't shrink those optical effects to make up for it! Cropping and enlarging will make all those flaws bigger. This has nothing to do with resolution, except for the fact that you personally feel compelled to crop because you have more resolution. It's a psychological issue, not a technical issue.