I guess I have two ideas that come to mind, and these are just personal observations and not at all scientific.
The first is that in train collecting, "it's all about condition". With real estate the three most important things are location, location, and location. Well, with trains it's condition, condition, and condition. I've come to realize that the TCA condition scale is not a lineal progression, but something more approaching an exponential or logarithmic scale. In appearance, C-6 may be incrementally better than C-5. But given the age and history of these toys, there are maybe one tenth as many C-6 out there as C-5, and they command ten times the price. C-7 is ten times as scarce as C-6, and ten times as expensive: which makes them something like 100 times less plentiful as C-5, and cost 100 times as much. C-8, one tenth as common as C-7, is 1000 times as scarce as C-5.
These are arbitrary and round numbers, but I think it reflects the situation and goes a long ways toward answering the question, why can't I find as many C-7's out there as C-5's? Over time, it's easy for a train to go from C-7 to C-6. None ever go from C-6 to C-7.
The other thought is that O Gauge, as compared to Standard Gauge, were less expensive when they were first made, and were produced in greater quantities. Since there were more of them made, theoretically they should be easier to collect. But since they were lower priced toys, they may have been banged around more and seen harder play use – and it may be possible that it could be harder to find top quality "flawless" prewar O Gauge than Standard Gauge for that reason.
Like you, I was brought up on my dad's Standard Gauge. While in okay condition, it was pretty well used and showed it. As a result, C-6 trains look about right to me, and I tend to collect good C-6's, sometimes a nice C-7, to run on the layout.
Eebbay is a good general source and any collector needs to keep an eye on what is offered there, but the higher quality trains are more likely to show up in private sales or at the big auction houses. Stout auctions is a quality outfit, and when they are auctioning off a collection from an estate, that is where you are most likely to come across C-7 and C-8 prewar tinplate.