How does Harvard CS even work in the shadow of MIT and its own very strong liberal arts program? I mean, it is a good department, definitely a top 20.

From an undergraduate standpoint, there certainly isn't a lack of interest in the program - the intro CS course is consistently one of the largest undergraduate courses. Though the smaller department size means certain courses aren't always offered, the quality of instruction tends to make up for this (as well as the possibility of cross-registering at MIT). A side effect of CS being an up-and-coming department is that many CS undergrads come to Harvard intending to study something else (say math, physics, or economics) and thus bring with them their diverse interests and skills to the classroom.

This isn't really a problem because Harvard and MIT allow students to cross-register (for up to half of your credits, the same as if you transferred from another school, although I'm not sure if the rules have changed in recent years).

By good, do you mean faculty positions elsewhere or is it hard in general to even get say senior jobs in the industry after being denied tenure?

People denied tenure in CS at Harvard have gotten senior (tenured) jobs elsewhere, but not in my opinion at places anywhere near as good.

You and I may have different views of what "anywhere near as good" means, so it's hard for me to accept your judgement at face value.

A difference is that people denied tenure at Harvard have gotten senior (tenured) jobs elsewhere.

My subjective sense is that there are only a few schools where denial of tenure isn't the end of the line for research professorial dreams.

OP's notion of the 7-year postdoc is an interesting one.