Hey Samsara! It's really cool to see someone picking this up for a TAS! I'm really glad to see some of the stuff I posed in this thread years ago actually being put to use!
I recently tried to improve my old TG16 run and ended up finding another oddity in the Stage 2 boss fight. Basically, I punched a knife once and it fell through the floor and de-spawned itself. I wouldn't be surprised if this ended up being possible on all 3 knives if it were looked into. I'll link both a youtube video and a video at 60fps in case you want to analyze it by the frame.
https://www.youtube.com/watch?v=-1R2yltXNPQ
https://www.mediafire.com/?8tf25149s78envt
As for ideas on things, I've been kicking around a few things since I watched this TAS. I have a feeling you might be able to avoid getting tagged by the final boss if you try jump kicks into slides after your first slide. I remember when funkdoc was trying to figure out the stage 5 boss on stream, he was going about it by taking hits, but if you do a jump kick into a slide, you never have to take any hits. The window is probably super tight though, since for whatever reason it's less forgiving to chain slides into regular attacks than the arcade version.
So my thoughts are that cycle one for stage 7 boss could be one of these:
1) slide hit, slide hit, slide hit, jump kick, slide hit = 9 damage
2) jump kick, slide hit, slide hit, slide hit, jump kick, slide hit = 10 damage
If the final boss works like the stage 5 boss in terms of how it handles the final hit being a slide kick, you should be able to carry that extra hit into the next cycle with method #2, which should save 1 hit in any subsequent cycle. I don't know how feasible this is, but I think it's worth looking into.