I'm not speaking to whether or not Diplomacy is fun. Diplomacy is definitely fun, nobody can dispute that. I'm discussing the incentive structure of the game and how, when framed in the context of the Prisoner's Dilemma, a seven way draw provides the most equitable and efficient outcome for all players. If seven players play and only one walks away with points, it's a very inefficient outcome, so it provides an incentive for players to keep their points. Diplomacy is a zero sum game, so no player is made better off without making another player worse off. Pareto efficiency doesn't exist in Diplomacy. There is always a cost in playing a game of Diplomacy, either in time, points, GR, or all three (ignoring external costs). Each player seeks to maximize his or her payoff for playing the game, which is the logical move for any player. This comes at the expense of other players, resulting in an inefficient distribution of points and six other players who have played the game for nothing other than fun, which is not quantifiable.
To clarify, I'm talking completely in theory. Humans are irrational creatures, which is why you get players who ignore a dominant player in WTA games and put up no resistance to one player taking all the points. The human element in full press means that anything is possible, which makes it different than a true Prisoners Dilemma where both parties have no contact with each other. In economics, the concept of "perfect competition" is studied as a basic set of rules governing business competition. Perfect competition doesn't exist. In the same vein, a seven way draw will never exist because this idealized scenario of rational actors is impossible to create in a game of Diplomacy.