You are mistaken, I'm afraid.You're thinking of replacing powers, which allows you to choose a higher-level power to replace a lower-level one, but the first chance you get to do that is level 13.
The power replacement you're referring to is in addition to the standard retraining available at every level.PHB p.28 said:Every time you gain a level, you can retrain your character: change one feat, power, or skill selection you made previously. You can make only one change at each level. When your class table tells you to replace a power you know with a different power of a higher level, that doesn’t count as retraining—you can still retrain an additional feat, power, or skill as normal.
You are mistaken, I'm afraid. The power replacement you're referring to is in addition to the standard retraining available at every level.
You are correct... I'd misread that passage.Err, no, read the section on powers I already quoted. It's at the very bottom of the first column of p. 28, second to last line. When retraining a power, you can choose one of the same level or lower. You cannot retrain a level 1 power to be a level 7 power or what have you.