Actually, T-Boy, I think, in your example, the chord *would* be called a G7, because with that change, the melody would have passed into another key(the key of F#) and the g would officially be called a flatted ninth, it would be functionally a passing chord in the dominant harmony( V7b5)--a key change like this(which actually happens a lot) is virtually never shown in the key signature, it is indicated with accidentals. From my own experience reading chords from sheet music,the- copyist will often paste the name of some random diminished chord, and leaves it to the chord player to deal with it as best as possible--Sometimes, they even leave it blank--
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