Betty --- The Livingston 7.5 is the most practical boat ever designed. We had one for years. Hanging it from the swim step should not be a problem. We used Weaver davits which set it a little highter than the swim step. We then leaned it forward against the rail rather than use stand-offs. This allowed any water that it might have collected to run out. But I was never aware of any water hitting it.
On most of our trips our runs between islands are short, so very often we would tow the dinghy. For this you need a towing harness. Do not try to tow the 7.5 with the single eye bolt between the bows. Put new eyes through each of the stems of the bows. Run lines from each to about six to ten feet forward. Connect your tow line here. Without this setup the dinghy has a mind of its own and will go where it wants. Strongly recommend floating line to keep it out of the prop when backing up.
Hanging a boat on your transom does challenge your aft vision, but good communication between skipper and crew more than makes up for this problem.
The only problem we had was not with the Livingston, but with age and good cooking. With the two of us, plus outboard, plus cooler, plus picnic lunch, the capacity was more than met. This left us with about four inches of freeboard. Twice we were swamped by other boats wakes. We now have an inflatable.
Towing will cost you about one knot of speed. With the boat on the swim step we still can get 14 knots with the Yanmar 110. Here in the islands, current has more affect on speed than anything else.
Good luck. --- Cary