Totally understand them not being able to carry multiple people straight away. That can totally be the 15th level feature.
But at 7th level, it’s medium sized. Which, granted, is a wide spectrum. But surely it wouldn’t be too overpowered to allow the ranger conditonally permanent flight at that level, would it?
Small creatures can use medium creatures as mounts without restrictions just as medium can use large mounts. Just be a gnome, halfling, goblin, kobold, or short human.