Assuming you are refering to something like a Champ, CAR 4a is the certification basis. 4a.605 states capacity has to be at least (.15 * max continious horspower) gallons. The 118 take off is actually a 115 hp engine, so .15 * 115=17.25 gallons minimum for your application.
In short, when making alterations, it is best to start with the original certification basis and work from there. Many times FAA will require upgrading to the regulations in effect at the time of application for the STC, but not always. If you were to try to modify a Champ to FAR 23 fuel system standards it would be impossible, so CAR 4a will be the prevailing document.
I don't think upgrading a 7AC to an O-235 is a viable project based on gross weight alone. Stick with the A-65. There is an STC for the O-235-C (115hp) on the 7AC, STC SA3-372, but doing a search, I can't come up with the owner of that STC. I don't know about your FSDO, but I know none of the ones I work with would give a field approval for this alteration. You might also want to check out Order 8900.1 chapter on major alterations to see how it would fit in if you need to develop engineering data to apply for an new STC.