In general, actions that involve 'please don't attack me, but feel free to attack my friends' such as Mirror Image are vastly less useful than 'hey, you, have a 50% penalty to your attack rolls against anyone + give bonuses to others to attack you' options. Especially as those blinded are a lot easier to take out or prone to take OAs to try to get to the Bard.
I have nothing against Glitterdust. Yes, debuffs do multiply in value when you have allies, but Mirror Image also steals attacks from your foe as well because each time an image is destroyed it is a wasted action. And again, your debuff has to actually work, where as Mirror Image just does.
Generally, yes. Let's just take the 10 weapon attacks as a useful # to look at. How many of those 10 attacks do you expect to land? Say 6?(given the -5/-10/-15 nature of extraBAB attacks...). So let's say there's 2 allies, so each ally is hitting 3 times out of those 10 weapon attacks. And by your number, 20 hp of damage per hit. And the Bard adds a hit for 20 points of damage.
Your math is just nuts, and so wonky I can't even follow it. Now you are the one clearly estimating.
First of all, it's very hard to get a Bard build that at mid levels hits for 20 damage a round (and to the extent you could, you could optimize another class even harder). That 20 average is for non-Bard classes with average optimization. Bards have high MAD, don't have any weapon buffs, are feat poor, and don't self-buff very powerfully. When you play Bard, you are giving up a huge amount of personal attack damage in order to share that damage with your allies. And the more allies you have, the more powerful that strategy is... which ought to be obvious to anyone without a bard chip on their shoulder. If you can show a 7th level Bard hitting for 20 damage on average each round, then there are builds for non-Bards that hit for far in excess of the 20 one can throw out there. Realistic Bards though don't hit that hard.
Exactly what 7th level party of 4 characters is generating 10 HITS a round every round sans ridiculous optimization? In general, you are dealing with 3-6 weapon attacks per round once you factor in tactical movement, charges, spell casting and so forth, of which maybe 3/4's will hit even with a +2 buff. Your buffs have to enhance those few attacks per round sufficiently to make up for your greatly diminished personal damage dealing capacity. With only a few allies, that rarely happens. I think you are trying to calculate total number of hits for the entire fight or something of the sort, and saying that a buff deals dividends from round to round. But so does just being a better fighter, as the damage from that cumulates from round to round as well.
But, let's just hand the Bard a bow, give the Bard say 2 hits, while doing 10 damage normally with those 2 hits, so 13 total.
Exactly what 7th level bard without ridiculously optimized gear is generating 10 damage per bow shot? Again, with high MAD you can't afford a lot of strength, so you are probably doing straight up weapon damage (1d6) plus some small bonus from magic and your own self buff. And with just 14 Dex (your number) and average BAB, you aren't hitting most of your shots. You'll be doing well to hit half of them. And again, if we are ridiculously optimizing the gear, we could optimize even harder for other combat classes.
Compare your bow strategy to being a flanking rouge attacking for 5d6 damage plus some bonus per attack with a better to hit bonus because less MAD and also granting allies a +2 bonus to hit. Your buff has to make up for that missing 14+ damage per round compared to the rogue. Or compare to a raging Barbarian hitting for 2d6+12 or so damage per attack with much more reliable hits (like rarely miss the first attack, and good chance of hitting the second). Or compare to the 8d6 damage the Sorcerer is doing with Scorching Ray, who can also Haste the party (and in more combats per day), and who can probably also drop Fireball when multiple targets present themselves yielding potentially 100+ damage per round. Again, showing that Haste or Glitterdust is a powerful strategy doesn't show the Bard is better than a full caster in that role, who can do the same strategy and then add his own powerful attacks on top of it. To show that the Bard is good, you have to make the case for Bardic Music, and that case depends heavily on the number of allies.
You are trying to claim that your Bard with ordinary equipment is generating on average 58 damage per round with just two allies? I'm not the one wildly estimating things here.