This issue seems to be tied to the display powersaving tech that Intel has called Panel Self Refresh, which may cause the display panel to not update in certain situations (though it's not good at figuring out what those situations are) to reduce power.
I've fixed it on my SP7 i5/8G/256G by installing the Intel Graphics Command Center from the Microsoft Store, opening it, going to System>Power>Panel Self Refresh and turning it off for both "On Battery" and "Plugged In".
I turned off the Panel Self Refresh for both "on battery" and "plugged". So far so good. 1 day without a single freeze. My SP7 seems to work as it should. I will report back again in a few days just to make sure.
EDIT: 2 days later, the issue is completely gone. Fixed. Millions of thanks to aeturnus to pinpoint the exact problem!