I had an Augen Gentouch. It wasn't very good and is missing some of the hardware the Dawa D7 has, so even if you did flash it with an Augen rom you'd probably lose features (Augen doesn't have multi-touch, 3D acceleration, g-sensor, USB host, or HDMI output). Someone was working on getting Cyanogenmod 6 on a Gentouch, but I never heard if they were successful or not. You're probably stuck with 2.1 unless/until Dawa releases a firmware update.
Just to be clear, when I wrote "multi-touch" I was using it as a generic term, since a lot of folks refer to anything other than 1-point touch as being "multi." Though you are technically correct that 2.1, at best, supports only "dual-touch" (2-point), because Google disabled support for TRUE "multi-touch" (3+ point) in the Android kernel for patent-related reasons. "Multi-Touch" is also an Apple trademarked term, so we Android folks should probably stop using it anyway.