I was told in grad school that it takes at least 7 years post MSW to become a really good therapist.

I don't doubt that at all. It'll take years in any profession to become really good at it. Practice after all does make perfect.
Especially in a therpist position. There are so many different problems one will encounter you can't expect someone to be great their first time.

I remember a situation that happened recently with a former employee of my agency. He had maybe his AA degree. He ended up getting fired for a bunch of unethical stuff. Anyways, we found out after he left from some other employees that he had his own "private practice" in his home. That is horrible I think. I think he was taking advantage of some vulnerable clients who didn't know any better to ask for his license and credentials.

While I don't think this situation is prevelant. I think it happens much more than we'd like to believe.
I remember seeing a story on W5 (Canada's Equivalent of 60 Minutes) about this Psychologist that lost his license but was still operating a practice. He was operating out of a hotel.

Nothing's really changed in this area. in fact, I had trouble finding a job because to save money a lot of agencies are hiring people with a degree in anything because they can pay them less money. They then hire one certified SW to sign off and bill for services. One of the major principles of SW practice is "to do no harm". By having unqualified people working with already disserviced clients, the system continues to bring a lot of harm onto the clients. My specialty is mental health, with adults. I wouldn't just want to go work with children because I am not trained properly in this area and I DO have a Master's in Social Work. Now when they let people with a degree in underwater basket weaving work with populations they have no clue in, I get really upset. Case in point, there was a woman who worked in my agency once. A client was hearing voices telling her to kill herself. The woman who obviously had no training and not too much common sense either (but that is another issue) told her "go down and lie in your bed, you'll feel better". If I wasn't there I shudder to think what could have happened to this client. I ended up taking her to the hospital where she remained for 3 weeks. This stuff happens all the time. When I was in grad school all the stuff was going on in NJ with the abused kids. Our reasoning behind this happening is due to lack of education and experience. I don't know who is to blame in this case, it is easy to blame it on the person working directly with the clients, but then again, is it really their fault if the overseeing agency hires them without the education or experience? Not really right?