7 is not too young. No age is too young to start learning about the Holocaust, but it must be done in an age-appropriate manner.
When we were in a museum that had exhibits relating to the Holocaust, I did not prevent my 3yo from seeing them, but I explained to him that there was once a war when a bad man tried to kill all the Jews, but he didn't succeed. To my 7yo and my 9yo I explained things in slightly greater detail.
The point is not to scare children, but to ensure that they grow up knowing about these things, so that they can understand and be open to learning more when they are ready.
The same with African slavery, the same with sexual abuse, the same with any of the horrors of our history.
If you don't know and understand that these things can and have happened, you may not believe that they are possible, and therefore they can happen again.
Wheeliemum, please talk to your dd's school. They need to understand that the way they are teaching about the Holocaust to this agegroup needs to be modified. It can be taught with hope and with compassion, too.