The interleaved memory access of the CPU & Agnus means that the amount of data that can be pulled from the RAM is directly related to the bus speed.
This, combined with the horizontal line frequency and the bus width determines how many memory accesses there can be per line - to get a 640x480 progressive scan you'd have to double the amount of accesses per second and there's not enough access slots to do this at 7 MHz.
When A1200 came out (too little too late by the end of '92) with AGA the CPU speed was doubled to 14MHz with a 32-bit wide bus which finally allowed for higher resolution progressive modes, more colours etc.