First, you have to remember that "sleeping through the night" for an baby is 5-6 hours, so technically your little one *IS* sleeping through the night. I HIGHLY recommend Elizabeth Pantley's No Cry Sleep Solution because it has a lot of valuable info and not just about sleep :)
Second, it's not recommended to give babies anything except liquid (breast milk, formula, juice, water, etc) in their bottle because of the choking hazard. That being said, many people do it, and their kids are just fine :) However, studies have shown that cereal given before bed or in their bedtime bottle doesn't make them sleep longer.
The next thing that stands out to me is that he's eating 7oz at a time!!!! That's absolutely AMAZING for a 5mo!!! How often does he eat during the day?
When it comes to naps, I can totally sympathize with you! My 6mo takes 2 naps each day and sleeps anywhere from 20-90 minutes, but it's usually less than 40 minutes at a time. Some days, I'm ready to pull my hair out and BEG for a longer nap....
My son is now 3.5yo, and he didn't sleep longer than 4 hours at a time until he was about 18 months old. I distinctly remember when he was about 4mo when he didn't go to bed for his longest sleep until 4am!!! (part of that was a result of a lack of routine) Even after 18mo, he went through a loooooong period of time where he would wake 4-5 times each night, and even now he wakes at least once per night to climb in bed with Daddy.
My 6mo daughter is the complete opposite!!! She's been "sleeping through the night" since she was around 4mo. She goes to bed around 9:30/10pm, wakes to nurse between 4 & 5am, then sleeps until 9:30am or so. She's a SO much better sleeper than my son!!!
My son did MUCH better with an earlier bedtime when he was younger, whereas my daughter is fine with her 10pm bedtime. We're a late household anyway, so a 7pm bedtime wouldn't work for us. BUT try it and see what happens. He may even sleep later than 5am if he's able to have a better sleep. This just goes to show that every baby/toddler/child is different, and you just have to go with the flow, especially when your son is so young. Have faith!!