Some background on villian - he is what you would call a chaser. On a previous hand, he called pot-sized bets with A4 on a 23J board when I had KJ (and got there on the river, of course). He's also capable of making bluffs and likes to show them off when they work.

Bottom line, it's entirely possible he has the 7, and it's entirely possible this is a stone-cold bluff.

Poker Stars
No Limit Holdem Ring game
Blinds: $0.25/$0.50
5 players


Stack sizes:
UTG: $92.45
CO: $52.30
Button: $72.90
SB: $34.60
Hero: $74.25

Pre-flop: (5 players) Hero is BB with
UTG folds, CO calls, Button calls, SB folds, SB folds, Hero raises to $3, CO folds, Button calls.

Flop: ($6.75, 2 players)
Hero bets $5, Button calls.

Turn: ($16.75, 2 players)
Hero bets $12, Button calls.

River: ($40.75, 2 players)
Hero checks, Button is all-in $52.9, Hero ?????

Id be more worried about 2 pair than I would that he has a 7. Fold.