The more I think about the various possible solutions, the less I like each. How ironic that the problems which JRRT could easily have cleared up by writing a single sentence or note somewhere are the ones that cause us the most difficulty, while the things that bothered him so much (round vs. flat earth, the origin of Orcs) seem to trouble us little!
I think now that them more we analyze every sentence, the more likely we are to come up with a completely unsatisfactory solution. For example, we could interperet the note as Jallanite proposes, and insist that three were slain in the Battle of the Powers, leaving four for the later wars. But we have no real hard evidence that such a solution is correct; insisting that it is is therefore unjustified. The change of Balrog to Demon is indeed interesting, and I agree that the suggested implication is possible. Or perhaps there is another explanation for the change.
As I think now, we have only two real possible solutions: to follow CRT and disregard the '7' note, or to be extremely ambiguous throughout the FoG. I lean toward the latter. This is not a fan-fictionalized Silmarillion. We are under no compulsion to use all of the old Tale.
We may be able to retain an ambiguous (but possibly 7 or 4) number of Balrogs while keeping more of the Tale than I had previously thought. What if we alter some of the mentions of Balrogs to more ambiguous words like 'Demon' or 'monster'? The latter is I think an excellent generic word.
Or, if many are unwilling to cut out any of the Tale: suppose we write from the viewpoint of a later scribe who is endeavouring to reconstruct a true account of events. It would then be perfectly reasonable to insert an editorial comment here or there explaining that there are varying versions of the legend, and that the number of actual Balrogs at the Fall of Gondolin is unknown. This is perhaps the most realistic option.
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