Ziporyn points out that the word used in the title to Chapter Seven for "ruling powers" also refers to "spiritual power". Thus, the lengthy story of how Liezi was enamored of a shaman with miraculous powers of divination only to learn that these had nothing to do with the Daoist experience, fits in well with the general theme of the chapter. In the final analysis, these two share the common belief that the manipulation of apparent reality is the best way to improve it.
It is unfortunate that the de of the Daodejing was so early on translated as "power", for it was only just an approximation of a meaning we find difficult to gasp let alone sum up in a single word, and is easily misunderstood. If it is power, it is the power that requires the exercise of no power.
Laozi’s master shows this shaman his inner experience of utter chaos and this sets him to running for his life and brings Liezi back to the real Daoist vision. He returned to the primal: "remaining remote from all endeavors and letting all the chiseled carvings of his character return to an unhewn blockishness. Solitary like a clump of soil, he planted his physical form there in its place, a mass of chaos and confusion." (7:11; Ziporyn)
We are familiar with the Daoist advocacy of the idea of "the unhewn block", an appreciation of the essential 'rightness' of things as they manifest before human intervention, but the idea of chaos and confusion as a positive value might be a bit much. Perhaps if we consider the unfolding Universe as an expression of that chaos it might help. All that we are and do does not exist outside of this chaos, but is its expression. Without the negative spin that the human fear of a reality devoid of an ultimate meaning-endowing "Truth" creates, an appreciation of chaos can in fact be a visceral affirmation of apparent reality and an expression of primal thankfulness.
In the end, chaos rules because that's really all there is. We can say this because, for Zhuangzi, chaos does not carry the negative connotation we usually associate with it, one that passes judgment on the way things are, but rather simply affirms things as they are before we judge them. And this is something of which we really have no idea at all.
If our manipulation of the world is understood as itself an expression of chaos, then we can continue to exercise this power, yet with a fundamentally different set of motivations. Nothing has to happen. (“Not doing, not being in charge of what has to happen.” (7:12)) We are free to care without sundering our essential unity with the whole. All is well. It is not truth that sets us free, but freedom from that need, that dependency.
You can check out Scott's writings on Zhuangzi here.