Hi,
A 7 day pass will save you some money - you should start using it from Narita Airport on the Narita Express and then to the Kansai Area and back within 7 days. It's very unclear why you would have any doubts regarding the pass. You can travel on all JR lines and for your itinerary there are no problems - you just can't take the fastest bullet trains, the Nozomi or Mizuho. But you will still arrive very quickly.
In addition to Osaka and Kyoto, you should not miss Nara either. You can also greatly increase the savings you get out of your pass by visiting some other areas as day trips. Himeji has the country's finest castle and the Kokoen Garden next to it is also beautiful. Hiroshima and Miyajima can be done as a day trip too and are some of the biggest tourist draws in the area, but aside from the Itsukushima Shrine with the giant "floating" torii, the Daishoin Temple is also a must-see place. There are several other pagodas and temples, and climbing Mt. Misen offers a fantastic view over the island and whole area. Kobe also makes a nice place to see for a day, and north of Tokyo there is Nikko which is also a must-see place. Within Tokyo you can still use the pass for the Yamanote Line. It doesn't go to all the places you might like to see, but it does cover several good tourist sights.
Best of luck.