7ft lb is not much at all for such a large nut. Or is that the torque for the stud into the head - that would make more sense and there would be another torque spec for the nut on the stud.
A tap can be used to clean out corroded or damaged threads but when you say the hole is stripped leads me to believe the threads are gone and the stud spins in the hole when you try and tighten the nut? If that's the case a tap isn't going to help at all.
Nothing wrong with trying a tap first but most of the taps you'll find at a hardware store are tapered taps. They taper to a point so they are much easier to get in straight when tapping by hand. Studs go into blind threaded holes - blind meaning they aren't open on the backside. Now picture your common tapered tap going down into the hole, when the tip of it hits the bottom it will only have completely threaded about 2/3 of the hole. What you would need is called a blind or bottoming tap, they do not taper at the tip so they will cut threads all the way to the bottom of the hole. The drawback is that without the tapered start they are very difficult to get started straight by hand. The best approach is to use a tapered tap first and then blind tap to finish off the bottom of the hole.
Drilling the hole out and tapping it for a larger stud is an extremely risky option. Studs only come in so many sizes and the next size larger won't just be a tiny bit larger, and the larger hole means thinner wall thickness for the hole. Going back to the different taps; a tapered tap is pretty easy on the material as it takes a good 10 turns to completely cut a thread, but a blind tap cuts the entire thread in 1/2 turn which puts a lot of force on the material and if the wall is too thin it will break out the side. One common way to minimize the risk is by switching from SAE to Metric or vice-versa >> 1/2" = 12.7mm so going from a 1/2" stud to a 14mm stud would only be 1.3mm larger. 12mm stud to 1/2" stud only .7mm larger.
This is also why they make threaded inserts. A threaded insert is just a coil of steel that goes into a threaded hole and then a bolt/stud can be threaded into the inside of that. The difference between the new hole and the old hole is very little, only the thickness of the coil itself. They come in a set with a drill bit that will drill out the stripped hole, a special tap to tap the hole, and an insertion tool used the install the coil. There's a picture and general description on wikipedia here:
http://en.wikipedia.org/wiki/Threaded_insert
William.