You would probably be working for $5 /hr but if you enjoyed the work that might be acceptable. I think it would be feasible to fix up 7" lathes and resell them at a "profit" (see my initial comment on the value of your labor). The bottom of the barrel on Ebay seem to sell for $450, sell them for $1450 and you would have have $1000 to cover parts, labor and profit.
Of course if you bought in bulk you might get a better price, but 100 at even $300 ea is $30,000 and how long would you be working on 100 of them to pay off that initial investment.
Considering LMS and MM sell their better spec'd 7x16" lathes for $1200-1600, a true custom finished, 100% ready to run could potentially sell at a price pushing $2000. Certainly that price would cut down on the potential market, but at the rate of production of one guy doing the work, that might be a big enough market and that higher price might get you $6 or 7 / hr.
Cowells sell a 3-1/2x8" gap bed (4.7") lathe for $2500+ so there is a market out there if you are serious.