If you're running an OS older than 10, I definitely wouldn’t upgrade. You'll lose your favorites dock, have to deal with widget stacks, have to adjust to the major step-backwards interface etc.
See the host of threads here and around the Internet. For example,
https://discussions.apple.com/thread/255140927?sortBy=rank
Besides, as you noted, you'll lose blood oxygen, which is an incredibly valuable feature and has even helped save lives.
I own a Series 7, too, and have passed up upgrades for several years for those very reasons. Your battery being an issue, however, changes the equation.
If I were in your shoes, I'd first explore what happens if you ask for battery servicing. Reports at one point were mixed on whether the replacement watches (refurbished) had O2 disabled or not. Of late, it seems that, if the replacement is imported, O2 will be disabled, but you'd want to confirm that with Apple.
If someone at Apple says O2 will still be functional, get that in writing!
Of course, a replacement for the 7 would almost assuredly come with a more recent Watch OS and you'd have to deal with getting used to the mess of interface, anyway.
At that point, a Series 10, brand new, would look pretty good…