"They keep violating every agreement and if this goes on, definitely there will be no deal, no ceasefire.
"This is not our army, this is not our government. They're worse enemies of Muslims than the Americans. They're US stooges and now it's clear that either we'll be martyred or we'll march forward."
The military said that among the seven fighters killed in Buner was a man they identified as "an important militant commander".
One soldier was also killed and three others wounded in the latest fighting, the military said.
It also accused the fighters of using about 2,000 villagers as human shields.
For their part, Taliban fighters appeared to have resumed armed patrols in Mingora, the main town in Swat valley.
The Taliban attacked a power station in the town on Monday, where some 46 soldiers and police officers are believed to be inside fighting the attackers.
"Despite the curfew, residents saw armed Taliban on the street which is a clear violation of the peace deal," Kamal Hyder, Al Jazeera's Pakistan correspondent, reported.
He said that the fighting had effectively destroyed the pact and was endangering civilian lives.
"The deal is dead. The only thing missing is for the courage to admit the deal is dead," he said.
"The serious worry is the military keeps on going after a bunch of fighters who will disappear into the mountains, and it is the people who are reeling under the effects of what is going on."
Buner lies just 100km from Islamabad, the Pakistani capital, and is to the southeast of the Swat valley, where the government and Taliban agreed the peace pact in February.
The deal alarmed US officials, who worry that Swat will turn into a haven for fighters near Afghanistan, where US and Nato troops are also battling the Taliban.
US officials also accused the Pakistani government of "abdicating" to the Taliban.
Others opposed to the pact had warned that it would only embolden the Taliban. They were vindicated when Taliban fighters moved into Buner a few days after the deal was reached, forcing Pakistani troops to go in and clear the region of the fighters.
"The military had to move into Buner after the civilian administration collapsed. They could not stop a few hundred Taliban from coming into Buner," Hyder said.
"No one can say whether the Pakistan government will survive. These are very serious, troubled times for Pakistan."
On Saturday, the government in Pakistan's North West Frontier Province (NWFP) announced the formation of an Islamic appeal court, or "Dar-ul-Qaza", saying that the court's establishment would put the onus on the fighters to lay down their weapons.
The creation of the court was among the demands made by Tehrik Nifaz Shariat-e-Muhammadi, a group led by Sufi Muhammad, an influential local religious leader who mediated the deal between the government and the Taliban.
But it has done little to stop the violence. On Sunday, two government workers were killed by suspected Taliban fighters.