For me it seems like both OP and his sister aren't able to withstand any kind of criticism.
Of course this is bad, but you should exploit the fact that you are older.
I see some kind of problems on more fronts.
Your sister is indeed a problem child.
Your parents don't seem to grasp the problem.
And you, who don't even own your own spine.
She is -seven-, show that you are older.

I do have a brother who is somewhat like your sister, only not that extreme.
The way I made it able to live at the same place like him, or even just being able to be in the same room as him is to make it clear who is the older one.
He might be nagging all the time, and never shut up, and not take no as a answer.
But all of that is forgotten if he actually manages to enrage me.
Im mad, and he knows he should better shut up and run away before my temper gets the best of me.
It usually takes no more than a enraged shout before he's almost crying.

The thing is that you don't own your own spine.
You do your sisters biddings, and return her insults.
Why are you putting yourself on her level, or sometimes even below her level?
That way, even if you're enraged she looks at you like you're younger than her.
Why don't you make a request from her of a change, and instead of insulting her just look like your unsatisfied.
If she does it, fine, thats it.
If she refuses, don't act angry or return any insults, just look unsatisfied.
If she hates critic, that should be even worse.
If you continue this every time she behaves like an arse, she should perhaps get a hint.
If she makes a ruccus in your room, just throw her out without a word or with a calm "that kind of behaviour you can do outside".
If she starts acting whiny if you deny a request, follow the same procedure.
Just keep yourself calm and show her who the older one is, and that you can easily ignore her if she acts that way.

It might be a pure hell in the start, but once she understands you're the older one, she should calm down.
But as said, get yourself a spine.
You're freaking out if a kid with a knife comes, and I dont blame you for that, but if you just disarm her, throw her out without anger and make it clear that you don't accept that behaviour and lock your door, she should understand in due time.
When she is at her worst, just go "I have better things to do" and go somewhere.

If all that doesn't help, move out.
You're fifteen, you're old enough to get a job.
School shouldnt be that of a bitch yet, so you've gotten the time.
Compared to the time wasted on your sister, that might perhaps even give you more spare time.
Just do it all calmly, and -never- under -any- circumstances put yourself to her own level of anger.
You may be angry, but always be the older part.
Even when you're angry.