@Alzarian
Yes, your assessment of the rules is correct. It was an automatic 5 due to the number of eligible shows, plus a tie. And yes it’s possible to have 7 nominees: in fact there were 7 nominees for Best Actor in a play just this year, due to this same rule.
As for whether it dilutes the award: If there are 6-7 genuinely excellent shows that all deserve recognition, then it’s great. But that’s usually not the case, especially in the musical categories. And in general, I do think the meaning of a Tony nomination has already been incredibly diluted.
The mere fact that there’s an automatic 5 nominees regardless of the quality of contenders is so frustrating to me. At least with the Oscars, you can pretty much guarantee there will be at least 10 worthy movies, because there are hundreds and hundreds of eligible movies (whether the 10 best movies actually get nominated is a totally different question, but at least it makes sense in theory). But automatically picking 5-6 nominees from a pool of 9? At a time when the quality of musical theatre on Broadway is already spotty at best? It’s a miracle that the Tonys are still taken seriously.
I keep saying they should implement a system whereby each nominator goes down the list of eligible contenders in each category, and gives each one a binary yea or nay for whether they feel it deserves a nomination (maybe with a cap of 4 or 5 yeas, but no minimum), and the only contenders that get nominations are the ones that reach a certain minimum percentage of yea votes among the total ballots cast - rather than going by the default top 5.