Our studies of compressively strained La0.7 Sr0.3 MnO7 (LSMO) thin films reveal the importance of domain structure and strain effects in the magnetization reversal and magnetotransport. Normal and grazing incidence x-ray diffraction indicate that the compressive strain on these LSMO thin films on (100) LaAlO3 is not completely relaxed up to thicknesses on the order of 1000 Å. The effect of the compressive strain is evident in the shape of the magnetization loops and the magnetotransport measurements at various temperatures. Although the domain wall contribution to the magnetoresistance is significantly larger than that predicted from a simple double exchange picture, the contribution is a small fraction of the measured magnetoresistance.