Okay, i think you’re a little confused.
You cant have stretch and bulge unless your tire is… well defective or old.
Stretch is when your tire is too thin relative to the rim
Bulge is when your tire is too wide relative to the rim.
Tread doesnt need to line up PERFECTly with the rim. Tire manufacturers use different standards when measuring their tires. a 205 from Toyo and a 205 from Bridgestone may not be the exact same width when seated on a rim.
Dont go anything larger than 215 on a 7 IMO.