First, bit rate doesn't apply to the line level outputs of the cdj. It will play at what ever bit rate the cd's are.
About the pitch fader. When running the cdj in midi mode, it will override the factory pitch fader settings and just send a coded signal(midi cc) to traktor; traktor will then interpret the signal and use it for the resolution you have set, 8% 10%... 50%.
As for the difference between 7-bit and 14-bit, this does not apply when your not using traktor. It only has to do with the midi cc message that is sent to traktor. If it's 7-bit then it is sending a smaller message, which means the fader will be less accurate. If it's 14-bit, then the message sends twice as much data, making it much more accurate.
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