I believe it refers to a clock position; 7 o'clock would thus be at the lower left on a coin or medal. In the instance cited by the poster, K-7 refers to the pivot point from which the doubled image emanates, so this doubling would become more pronounced the further it is from that position.
Years ago there was a device for measuring degrees of rotation between dies, or the Kolit Scale. Evidently, Kolit was the fellow who created this tool, and the K positions are still used by some. I'm not certain whether this use of "K" applies to the example cited.