The PD-7 OD/Distortion is already a compressed sound & already reduces the dynamics of the sound.
PF could perhaps prevent the signal from overloading if used as a limter. Or maybe tighten the sound but not so obvious compared to using it as a single pedal
If placed in front, perhaps the PD-7 will sound less raw with the dynamics already being reduced.
No fixed level on the PF. As long as the output level from PF is high enough for the PD-7's Gain level to sit comfortably at 12 o'clock, there shouldn't be any problem.
You might want to be have minimal compression on the PF though. Since the sound is going to get compressed again when the PD-7 is engaged.
which pedal are you refering to about true bypass? Aphex is a audio company so my guess is they treat any alteration of the original sound very strictly.
My guess is the PD7 already compresses the sound since it's the nature of an overdrive pedal.
The Punch Factory is a subtle compressor, if the dynamics were already compressed when running into it, the compression would not be so obvious.