[link to unveilingtheapocalypse.blogspot.co.uk
The symbolism behind the seven heads of the Dragon and Beast is one of the most enigmatic portions of the Apocalypse. The imagery of both the Dragon and Beast of Revelation is lifted largely from the beast with ten horns described in chapter seven of the Book of Daniel, and transposed onto the template of the seven-headed water dragon found in the mythology of the Ancient Near East. In the Ugaritic myths found in the Ras Shamra literature of the early 2nd millennium BC, this seven-headed creature was known as Lotan - which was equivalent to Levithan/Rahab in Hebrew cosmology, and also associated with Tiamat of Babylonian mythology. And if we look back to the Book of Daniel, we find that the combined head count of the four beasts also gives seven (the beast like a leopard has four heads, which along with the heads of the other three beasts gives seven in total). The Apocalypse combines the four beasts of Daniel in order to form its own unique monstrous amalgam in the Beast from the sea, which is heavily laden with symbolic import. The Beast from the sea described in Rev 13 is a composite formed from each of the beasts in Daniel. The beasts like a leopard, bear and lion are merged together with that of the beast with ten horns to form a single entity:
And I saw a beast rising out of the sea, with ten horns and seven heads, with ten diadems on its horns and blasphemous names on its heads. And the beast that I saw was like a leopard; its feet were like a bear's, and its mouth was like a lion's mouth. And to it the dragon gave his power and his throne and great authority. One of its heads seemed to have a mortal wound, but its mortal wound was healed, and the whole earth marveled as they followed the beast.
The four empires represented by the four beasts in the Book of Daniel are thus moulded together to form a single, all-encompassing world empire. An empire which is at first controlled by the woman/Babylon (who rides the Beast as if it were some kind of mounted steed - to be steered in the direction of her choosing). But the woman/Babylon is then stripped of her authority by the ten kings (who are represented by the ten horns) - whose purpose is to hand over their power to the Beast itself (Rev 17:13, 17).
The Book of Revelation's presentation of the Beast with seven heads was undoubtedly originally intended as a critique of the imperial cultus. Rome was famed in the ancient world as the city of the seven hills. The limits of the ancient city was seated on the Aventine, Caelian, Capitoline, Esquiline, Palatine, Quirinal and Viminal hills (Vatican hill, situated across the Tiber, was not counted as one of these - which confounds some recent Protestant interpretations depicting the papacy as the Beast). So the city with seven hills was almost certainly in mind here - a fact which is reinforced by the Beast's association with the whore of Babylon in the narrative of the Apocalypse. Another canonical writing, the First Epistle of St. Peter, also uses the term "Babylon" as a cipher for ancient Rome: