Ah you are correct that’s a typo, based on the actions of the real Gauthier who did this (and was S5). The invocation of S7 in the example is for narrative effect. I was trying to get across that there is a a level of station where pleasure houses are below you but you can host your own party.
The rules on page 26 take precedence over the examples: S7 and S8 cannot write Militias. Better find a low station toady to do your dirty work!