My main question is why is 7.dxe5 always passed up in the games I've found?

First things first. I think 9...Nbd7 is wrong. Its too early for that knight move. Best options are 9...Re8, 9...c6 or 9...Rf8

i don't play the king's indian defence since that day I was whacked by someone using the Bayonet Attack 

and I never looked back. I hope I shared something useful.

Yes, that first game is helpful. I think in that position I might have had a mental block in the form of an irrational fear of letting White achieve the protected d5 pawn but I realized from that game it's not as hard to confront as I was imagining.

About the Bayonet attack - There have been some great articles recently on that attack and I've been enjoying play from both sides.

The problem with 7.dxe5 is not that it's so good for White, it's that it doesn't lead to the sharp unbalanced positions that you're looking for when you play the KID

In the final position after 12 O-O-O, Black seems to have more or less equalized. for instance 12...Rf8, 13,Rfe1, Nxe4 14.Be3, b6 Black is doing fine. Unless I'm missing something, which isn't unlikely, Black has little to fear objectively from this approach, which is probably why the top GMs avoid it when they have White

Hey Logan whot up my old friend! It is Interesting to me to read your aspects on the matter. For me - who very liked to play d4 with both colors- I rarely considered to play 7.dxe5 at my actual games, just prefer to push the pawn on d5. Apart from what theory says -which truth is I have not much to say- , a practical explanation of my view is that it is somewhat passive, "noise" or costly to spend a move just to exchange 2 central pawns, opening the game so early for white (before castling etc) , black is quite prepared for that. It is more "natural" I believe for white to push the pawn, gain that space and close the center. These few words from me in a case of KID that interested me to.

i recommend 9 Re8 not Nbd7 10.nd5 looks too strong

The exchange variation, 7. dxe5, had some popularity a long time ago. And you can see why, look at the position after 9. Bg5, white has all his minor pieces developed and active. Black still has 2 minors to develop and the bishop on g7 is staring at a pawn fixed on e5. Meanwhile, black has nothing better to do than move the rook off the open file? This position is classically delicious for white. But somehow there just isn't the dynamic follow up. Black is actually equal in this position.

I played this line in a tournament several years back (didn't know it at the time, it just looked good).  We followed the Gallagher game posted by opticnerve until move 12 when I played 12. d6. I then protected the crap out of the d6 pawn and went on to win. When I analyzed the game with the computer later, I found this is not winning for white. The pawn on d6 cannot be protected enough, it is overextended.

Anyway, I looked at a lot of different ways to play this line after that game and finally concluded that at best it's equal and black quickly gets a lot of good play. That doesn't mean it's easy for black, but at the top level GMs won't be getting the winning chances they want with white.

If my memory serves me right 9. Nbd7 is playable, just not the most popular move. As mentioned by paulgottlieb, 12... Rf8 looks like a logical candidate for black in your original line. Actually, if I were white I would be somewhat worried that the knight in c7 might get into trouble eventually but maybe white has enough tactical resources. I haven't really looked deep enough...

The dxe5 line isn't very popular in this position because White has never found a convincing route to a "normal" advantage, while he can hope for more by avoiding the exchange.

This not to say it is actually BAD, of course, just that White can only force the slightest of advantages if any, and so at the master level this is not acceptable - if Black is relatively equal in the opening, he "wins" the opening battle.

If your opponent is known as an attacking player who has good results with the usual KID, though, it is certainly a viable alternative to give him positions he probably doesn't often have to play, and "quieter" than he might enjoy.