Well, I can only answer based on what I am doing! Ethan just turned one, and we have the same exact bottle schedule and ozs. as you. Although he doesn't usually take the full 7 oz feed, except after his pm nap.
1) I introduced milk in one bottle for a few days to make sure he didn't have any reaction to it. Now I have 2 bottles of milk (the morning and lunch ones), and the last 2 of formula. Once I am done with this can, we'll be switching to whole milk for all bottles.
2) My ped at his 12 month check suggested 20 to 24 oz of dairy total a day. Like I said, my ds doesn't take his entire 28 oz offered each day, so that's probably what he's getting right now. That doesn't even include any dairy in his table food (although he doesn't like yogurt or cheese much at all!)
3) Again, I replaced one bottle to make sure he had no reaction to the milk, and once I was satisfied that he didn't, I switched two bottles of the four to milk, and will eventually switch all four.
4) My plan is to continue to give him milk with all meals, and eventually replace the afternoon bottle with water and snack. Right now he gets a small snack and the bottle.
We are currently trying to wean from the bottle, which is proving difficult for us. Ds takes water from his sippy really well, and has been for a few months, but doesn't like the milk in it. I was offering milk in the sippy, and then dumping the rest in a bottle for him to finish. But that wasn't getting us anywhere. So, I've decided that for breakfast (which is the bottle he takes the least of), I'm only offering milk in the sippy with breakfast, and then bring the sippy to his playroom with us for the rest of the morning. No more bottle for breakfast. I know he won't starve, since he still eats well, and is getting 3 other bottles the rest of the day. But I need to start somewhere. Today was our first day of this, and he took about 4 oz of milk from his sippy by the time he was ready for his morning nap. So that is very definite progress. I think I just need to do that for him to realize if he wants it, he's going to have to drink it from the sippy. Once we get breakfast under control, I plan to switch to lunch and do the same...
Good luck!