There is a lot of both correct and mis-information in this thread.
First, some confusion to clear up - the battery charger (AKA charge manager) is actually built into the tablet itself. The thing you plug into the USB connector is simply a power supply. The supply you use should be able to deliver 2 Amps. There are lots of different chargers out that that supply USB level voltage (5V) but can't supply enough current. Typical phone chargers can only give you 1 Amp. This leads to slower charging. A PC USB port can only give you a max of 1/2 Amp and MUCH slower charging. Use the stock wall wart that comes with the N7 or one that delivers 2 Amps or better for best results.
The charge manager in the N7 will not let the batter over charge and will prevent it from discharging lower than a safe level. LiPos will become damaged below a certain voltage level.
0 to 100% is basically a fabrication of the Android software.
LiPos have a limited lifetime. Calendar age is one factor. Heat and cold affect capacity and lifetime. Number of discharge/charge cycles is another factor and we do have some control over this. However, there isn't a simple formula you can use and every battery design is a little different. In it's simplest form, deep discharge cycles wear the LiPo out more quickly that shallow ones. This is the source of the "top it off" advice and it's a very good idea. Your battery will last a lot longer if you don't let it go below 80%. It won't kill your battery to discharge to 20% once in a while, but do it regularly and you will definitely shorten it's life. There's a chart on the internet (that I couldn't find in my quick look) that shows the relationship between depth of discharge and max number of cycles at that discharge level. Below 50% it starts to look pretty bad.
I don't believe that the battery manager needs to the see a low discharge to "calibrate" the battery capacity. For LiPos, most capacity estimates (which is really all you are getting) are based on LiPo voltage which follows a well understood discharge/charge curve. I don't know what the charge manager in the N7 is set to though I wouldn't be surprised if it is 3.45V to 4.2V (I also wouldn't be surprised if it was somewhat different - every battery design is slightly different). So going with above numbers, 3.45 is 0% and 4.2 is 100% and the software "linearizes" the non-linear discharge curve. This is why when charging, you may see the % stuck when in fact,the battery is just in a "flatter" part of it's charge/discharge curve. You don't see this when discharging because most people don't hope that it goes down (i.e you aren't really looking at it so closely).
Leaving the N7 plugged in for extended periods should not damage the battery if the circuit designers did their job (which, I am confident they did).
By the way, if you are using the N7 while charging, expect it to take longer. A running N7 will pull about 400 mA (.4 Amp) which DOESN'T go to the battery. Less so if it's sleeping, of course.
PS, good point on the USB plug/jack wearing out. They are probably spec'd for something like 10K lifetime insertions/removals but that assumes perfect alignment each time.