I think 7 as "average" is derived from the academic grading system in elementary and high school curriculums.
On the topic, I prefer using a modified 1-10 system as well.
I use 8 as a default score, and series that are scored 8 often give little to no impact on me. (Older series that I have watched at least two episodes are scored 8 as well.)
Series with 9 are those ones that I enjoyed watching. Currently 43 series I've watched belong to this category.
The ones that I scored perfect 10 are "masterpieces" in my own opinion. Most of them have high rewatch values, and have given me intense emotions that they intend to give the viewers. These series include Summer Wars, Gosick, Toradora!, K-ON!!, Rurouni Kenshin, Shakugan no Shana, Ghost Hunt and Suzuka (although seeing Kimi no Iru Machi, I wonder why I graded Suzuka 10
).
MAL's rating system is surprisingly flexible, and anyone can use their own style of grading. That would pose some problems when a certain user interprets another user's rating system.