The PDP-7 was too small and too slow; quoting Dennis M. Ritchie in The Development of the C Language:
On the PDP-7 Unix system, only a few things were written in B except B itself, because the machine was too small and too slow to do more than experiment; rewriting the operating system and the utilities wholly into B was too expensive a step to seem feasible. At some point Thompson relieved the address-space crunch by offering a “virtual B” compiler that allowed the interpreted program to occupy more than 8K bytes by paging the code and data within the interpreter, but it was too slow to be practical for the common utilities.
If the developers excluded rewriting everything in B, rewriting everything in C would probably never have been considered, especially since by the time C became useful, the PDP-7 was thoroughly obsolete. Quoting Ritchie again in The Evolution of the Unix Time-sharing System:
By the beginning of 1970, PDP-7 Unix was a going concern. Primitive by today's standards, it was still capable of providing a more congenial programming environment than its alternatives. Nevertheless, it was clear that the PDP-7, a machine we didn't even own, was already obsolete, and its successors in the same line offered little of interest.
By the time UNIX was considered portable, in the late seventies, the PDP-7 was definitely no longer a target for porting...