CPU cooler clearance for the LZ7 is listed as 65mm, with 60mm or less the recommended maximum height...
Thats is indeed correct. The full clearance is around 68mm, but at that point your CPU cooler/fan would be touching the underside of the Power Supply, this is why 65mm is stated as the max to give some clearance, your CPU cooler fan won't function well without it.
Ideally you need at least 10mm clearance which is why the specs say under 60mm recommended, there are a fair few good coolers under this height including the Scythe Big Shuriken 2 at 58mm which would be my number 1 choice (with the fan swapped out to something like the new slim Noctua 120mm).
What's the highest processor TDP that this case can handle? I'm interested in building a ryzen @ 4GHz and would like to know if this case could handle it.
Thats a difficult one to answer, because its dependent on what you class as acceptable noise levels, which is subjective and different for everyone.
Personally I wouldn't go above 65W as my priority is low noise, the case can handle CPU's of 65W TDP very quietly with the right cooling setup (see HERE).
I'm sure you could put a 95W TDP processor in and achieve acceptable temperatures with a bit more noise, overclocking however I'm not sure how much headroom you would have, probably not much. But can you overclock a CPU well in any of the current 7 litre cases?