I'm having difficulty accepting that I should hit a 16 against a 7

[CORed]

Actually, 16 vs. 10 is very close, with hitting just barely better than standing. 16 vs. 7 is not close. Hitting is much better. I don't have my copy of "Professional Blackjack" handy, so I can't give you exact EV'S.

Like a lot of blackjack basic strategy, this is a choice of evils, both options are -EV, but hitting is better. The reason that 16 vs. 10 is close and 16 vs. 7 isn't is that against a dealer 10, you will frequently lose to a 20 when you hit and don't bust, but against a 7, you will are more likely to beat the dealer's 17. Even though the dealer is more likely to bust with a 7 than with a 10, this does not make up for the higher probability of beating him when you hit and don't bust. 16 vs. 7 is, overall, quite a bit better EV than 16 vs. 10.

A lot of blackjack basic strategy is counter-intuitive. This is one reason that casinos make money off of a game that is nearly even if played correctly. A lot of people just don't believe the strategy charts, and think they can do better by "going with their gut". Also, I think there is a psychological factor. When you bust, the dealer scoops up your cards and money right away, sending a message that you screwed up. When you stand, you feel like you still have a chance, even though you actually lose more often.