I am also in zone 7, and I am going to use a similar approach to what you described. However, I would not seal the edges of the barrel with dirt. I tried that last year and the trees seemed to dry-out very badly under the barrels. This year after wrapping and mulching the trees, I am going to set the cover barrels on 2x4s or bricks to allow them to breathe just a little.
The way I figure it the goal is to keep them from hard freeze, not any freeze at all. Or at least that is what my goal is considering the varieties I am growing in ground.