Oh Andrew,
I'm so glad to see this posting of yours. Specifically, I'm referring to this:
>> Also, the tones 3 and 7 are indistinguishable except in sandhi form.
I've been struggling with this for ages.
[ Background. ] I believe I speak Penang Hokkien natively. Although my mother's dialect is Amoy-like (from Seremban, Malaysia), my father was born and bred in Penang, from a family which has been there for many generations. My mother has a good ear for languages and learnt to speak Penang Hokkien - as far as I can tell- (near-)natively, living with my father and bringing her family up Penang. So, as I grew up (more or less) in Penang, I don't think that any deficiencies in my accent are a result of influences from her non-native Penang Hokkien (though of course they could be).
Now to come to my point.
Try as I may, I haven't been able to distinguish more than 4 tones in my Hokkien. Now, these correspond more or less to the 4 tones that I was taught for Mandarin (in all my futile childhood attempts at Mandarin classes), so undoubtedly this may have some influence on my own perception of my Hokkien tones. Nevertheless, I have basic training in linguistics (specifically 1st year linguistics at university, with a lot more reading afterwards), and I speak English, German, and Dutch quite well (and a smattering of Danish!), so I'm not "linguistically naive".
I have lately begun to suspect that of the 7 tones which Hokkien is said to have:
#) 1 of them is a ru-tone tone anyway, which I would just consider to be one of the other tones, with a consonant at the end.
#) 1 of them has indeed collapsed with another in Penang Hokkien.
#) 1 of them is actually slightly different from the remaining 4, but I don't make the distinction (i.e. am not 100% native speaker competent).
Andrew, this is where you come in

.
The whole discussion only makes sense if we pin it down to concrete words. In the next few weeks, I'll try and draw up a list of words, and try and set out the tonal system of my idiolect, and see what you (as a native Penang Hokkien speaker) think of it.
This will take quite a lot of analysing on my part (plus the fact that my Hokkien vocabulary is quite limited, so I can't always get as many contrastive words - e.g. same sound in x different tones - as I would like).
Anyway, I look forward to presenting this all, and hope you will be willing and able to give me a bit of help on it. It would finally clear up the mystery for me of, on the one hand, all the experts saying that Hokkien has 7 tones, and, on the other hand, of my only ever perceiving 4 in my idiolect. [ I once even wrote to a Chinese dialectologist in the US, who confirmed to me that it was (in her opinion) extremely unlikely that Penang Hokkien had undergone such massive tonal collapse that there would be only 4 tones. ]
I'll start a new topic for this, when I get it all together.
Cheers,
Sim.
[%sig%]