I am more familiar with Audio rather than MIDI, and with Pro Audio 9. Are you able to do "split points"? Not punch in or punch out, but rather creating, let's say for a part you want to edit, two splits. One before and one after the area being editted where you can add note data or control data with added timing elements to that area or deleting to remove or replace an area?
Also this might need to be done one track at a time. It's a suggestion based on what I know of PA9 and not 7 and also Digital Audio and not MIDI.
Sorry for the delay on a response, but I was waiting for someone that might know more than I do.