The Vatican is not within the seven hills of Rome. I've been there. It's outside the hills and across the Tiber River.
The following is a map of Rome:
http://www.hotelsitalyonline.com/cities/rome_map.jpg
The Vatican City is on the West Bank of the Tiber River, just a few blocks West of Castel Sant'Angelo, which is on the West bank of the Tiber River.
The following is a map of the Seven Hills of Rome:
http://www.utexas.edu/...romanciv/Romancivimages13/hills.jpg
The seven hills lie entirely on the Eastern side of the Tiber River. This is plainly visible.
The Vatican City cannot be the Beast of Revelation.