All very good points and things I have been thinking of!
If we decide to do this, I talked to my husband about carving out scheduled time so we don’t get tempted to have the lesson whenever it’s convenient, and based on what everyone else is doing. I think that would send a message that the music lesson is not that important. Saturday mornings I have a block of time of about 2 hours that it’s me and her that would work perfectly. No distractions from anyone else. Another option is I have a Yamaha digital piano (88 weighted keys) that I could set up in another room that would be completely private.
I've never formally given piano lessons in a professional setting. However, I have given beginner lessons to 3 friends over the last 15 years or so, 2 were teenagers and one a young adult at my home, very informally though and not structured or scheduled. The expectation of those lessons from my friends were to learn just the basics to have an understanding of the piano. They felt it would help them with their music studies in other instruments (classical guitar, clarinet and trombone). As a musician, piano is my primary instrument now. I did not continue my clarinet studies after high school when I started college. It became an obsession from everyone around me to eat, sleep and breathe clarinet and make playing a career for sure when I wasn’t 100% what I still wanted to do. I was completely turned off from the constant pressure and gave it up. The nice thing about piano is I never had that pressure, I could play just for the pure pleasure of it.
I've asked my daughter why she wants to learn and what her goals are. Of course, she's 7, so I don't know that she's thinking very long term.

She said sees how much I love piano, music in general, and knows my love of piano came from my grandmother. Our family ties are strong, and I think that’s why it was so interesting to me as kid to learn and maybe why my daughter is interested. She sees the love of music in my family and wants to understand that herself. We used to hold little informal recitals in our home when I was growing up and everyone would come and listen to my grandmother play and when I learned, I would play for my family. My daughter loves to listen and has her favorites on a little mp3 player she plays all the time. I think MY goal is to show her how much joy music can bring a person, to instill an appreciation and love for it.
When I asked her why she wants ME to teach her, she said she would feel more comfortable with me and didn’t even want to consider the option of an outside teacher. Getting to the bottom of that feeling, she is a very sensitive kid and gets embarrassed and very upset with herself when she makes mistakes. And I know the feeling… I am very much like her in that way. As a music student when I couldn’t get something right that I had practiced over and over for hours, I would sit and cry and feel discouraged. I don’t think my teacher knew how to help me. Eventually as I got older, and a little more mature I learned to stop being so hard on myself and it was ok to make mistakes. In this way, I believe I could help my daughter. Like I said in the first post, my thoughts were to teach her through the basics. I do believe I have the ability, based on musical background, ability to play and the love of music. I believe my hangups are coming from my lack of music degree or formal training as a teacher.