yes, W2L, I understand that and you are correct; Proverbs are wisdom for godly living, King Solomon wrote them as advice to the people of Israel.
Concerning this verse 7, People generally are much more likely to show kindness in return to a person who they genuinely believe is not a threat to them but a help.
It is my understanding that the lesson is to please God in our relationships, not to be 'nice' to people so they will like us. God wants us to put our energies into pleasing him, transforming us into his likeness. Even if our enemies don't respond the way we would wish, we haven't lost anything in one way, as ultimately he is the only one that matters.
I am sure that the Lord delights in the prayers of children and blessed my little son, all those years ago, as he put his faith into practice and held on tight to God. This was a request in prayer that was answered, based on Proverbs 16 verse 7, I accept it in faith and thank and praise God for it.
I have no doubt that you are right, there are other situations where it could not be applied in quite the same way, it just isn't a perfect world and Satan does cause a lot of trouble.