A.C.
I am not a big supporter of CIO, simply because it doesn't work for all children. My daughter would cry until she threw up....night after night after night. Yes, I did the gradual method...she still wasn't having anything to do with it. I tried it at sixmonths and one year...even took time off work to deal with how I was feeling after a sleepless night.
My daughter is very sensitive to schedule changes. Vacation is mostly a nightmare because her sleep schedule gets completely whacked out. She won't go to sleep, she won't stay asleep, and she gets a run of night terrors. The only upside is that I have a chance to take a nap the next day.
He IS capable of manipulating his environment at this age BUT I think you have to address the root of the problem. Something must be waking him up. Is it his two year old molars? Something changed in his activity level?
You didn't say how your husband had been back, but it could just be an adjustment period. I changed my daughter's daycare right around her second birthday and it took very nearly TWO weeks for things to resemble some level of normalcy.
Try to continue keeping a constant schedule. Have your husband give him a lot of extra snuggle and play time during the day. 7 months is a long time for a kid that age. He "knows" who daddy is, but that doesn't mean he has the same relationship as with mommy.