I think you are basically correct on the introduction of the numbers.
As regards the LB7, I am told they went from 0 to 99,999, then they started back at 0 with an "A" prefix and when up through A99.999. Then it was B, C, D etc. through the whole alphabet.
Then they used an "AA" prefix, BB, CC on through AZ.
They again started over with the prefix of AB going through the alphabet, then on to AC, etc.
I am not sure where they ended, but I think they got at least as far as LM before they dropped the numbering system. If I am understanding & recall correctly what I remember reading (in BF) that would mean they had made in excess of 40,000,000 LB7s before they dropped the numbering system.
If I am wrong, I do hope someone will correct me.
If I am am right, the large number of the LB7s made would account for the quantity of them still on the market today, 8 years after Schrade closed their doors.