Here is the qualification for a large envelope from the USPS's web page. From this I would say a 4x7 bubble envelope would qualify for this rate because the 7" height exceeds the minimum height. So, you should be charged .80 cents not $1.13 an ounce.

Large Envelope

Dimension......Minimum (1).....Maximum
--Height........6-1/8 inches......12 inches
--Length........11-1/2 inches....15 inches
--Thickness....1/4 inch............3/4 inch

(1) Large envelopes exceed at least one of these dimensions.

For example, an envelope 10 long x 8 inches high x 1/4 inch thick is considered a large envelope because it exceeds the minimum height dimension.

Large Envelopes that are rigid, nonrectangular, or not uniformly thick pay package rates.

For Large Envelopes, length is the longest dimension.

For larger items, see Package.