If the new 7 is ever built, I'd think they'd have to do something with the Hanlon (new 6, aka 6 north), or else it would be completely overloaded. Though I'm not sure that 6 north (Hanlon) is better to drive on that 6 south (401 to 403). At least the south bit moves ... on the Hanlon it often seems to take forever to move at that slow speed limit, hitting every traffic light, and often seems congested. Lately travelling from Guelph to Toronto I've just been heading east on Speedvale to Guelph Line.
If it was built to near 400 series standards (which I believe it was), there should be enough room in the median to add one lane in each direction. I would imagine that that would be a sufficient size to act as a connector. I think a pretty good indicator of what size would be needed would be the two "connector" highways being built as part of the 407 East Extension. If those highways are only built out to 6 lanes, then 6 lanes should be sufficient in Guelph, given the population.
Those new highways aren't particularly long, with most of the alignment still the same. And with 8 in Kitchener, what do you do at the Conestoga Parkway? The Conestoga has 3 different numbers; 7-8 west of 8. 7 between 8 and 85. And 85 north of where 7 heads to Guelph (with 85 turning into Regional Road 85 while still an expressway). Which piece do you call 408? It's hardly recent though ... it's about 25 years since Highway 8 was finally upgraded all the way from 401 to 7. I'd say if it's not broke, don't fix it.
Ideally, what I'd like to see, and this is a pretty big long shot, but I figured I'd try to explain it anyways, is this:
1) The Province buy back the part of the 407 that runs from the 407-403-QEW interchange in Burlington to the 403-407 interchange in Mississauga, as well as the short connector piece of the 407 that runs N-S between the 401 and the 403. Re-designate those highways as what they were originally supposed to be.
2) If a straight buy-out is too expensive, work out a deal that the Province build a new west extension to the 407 from the current 401-407 interchange to just east of Guelph, and do some sort of a swap for it. This would have the 407 continue west instead of dip south in the weird zig-zag that it currently does. As of just east of Guelph, it would become a publicly-owned toll highway through Guelph and on to Kitchener.
3) Once it reaches Kitchener, it would connect with the Conestoga Parkway, and become a non-tolled public highway. The majority of the Conestoga Parkway would be designated as 407, with the connector between the 407 and the 401 as the 408. The section north of where the 407 would connect with the Conestoga Parkway would stay as Highway 85. As for the free vs un-free thing, think of the Mass Pike. Through the City of Boston, it's a free highway, but right after leaving the city, it becomes tolled.
This is all part of the larger vision that I have to create an 'Ontario Turnpike', using the 407 as that route, eventually running from Stratford to Ottawa (although admittedly not for a long time would the two segments actually connect).