Yes, the 7" headlight looks great and the 5 3/4" looks bad. I'll do this mod when I get some cash.
So there are lots of things that are not DOT approved that people do to their bikes: loud exhaust systems, ECU mods that are no friend to the EPA, aftermarket turn signals and other lights that don't meet the size or placement specs, license plate mounts that are less than visible, the list goes on.
If you live in a state where you have to get your bike inspected they might notice some obvious things and the same applies if you get pulled over. Super loud exhaust on a new bike is an obvious one, as are bad license plate mounts and lights that are missing, no mirrors. Some inspectors or police may know a few more details: minimum/maximum license plate height, allowable dB from exhaust. Ask either of them the minimum distance between turn signals for a new motorcycle and you're likely to get a blank stare. Yearly inspections can be trouble, inspectors know what a stock exhaust looks like and what aftermarket looks like.
In general, if you're speeding or riding recklessly and get pulled over they may start looking at these things. If your lights or exhaust are obviously way out of spec and you're in a crowded area you may get pulled over just for that. In general they give you a ticket or a warning which you can often get out of if you correct the problem. I've never heard of anyone getting a federal fine for anything like this.
I've heard of people getting pulled over for loud exhausts. Anything else, again, if you're already pulled over and they're looking for more tickets to give you.
Back to the 7" light. I don't know if any inspector or LEO would even know it needs to be adjustable or know by looking at it that it's not. If it's misaligned and blinding people they'll notice.
Scott