The only thing I could find about "Seven Ghosts" is the Shichirō Falls. The idea is that there were seven court ladies from the defeated Taira clan fleeing the Minamoto clan into the mountains, and they decided to jump off a waterfall instead of getting captured. The local villagers buried their bodies and built a shrine over the area.
And I have no clue about the last line, but I have a pretty good feeling it's word-play.
