The owner's manual calls for 7.25L engine oil. I checked today and the reading (at operating temperature) was 7.5L. Can the extra .25L damage the engine or cause any other negative effects?

 

An extra 250 ml won't cause any problems, assuming the reading is accurate.
You would need to overfill by 2 litres or more to cause real problems.

 

While this may be true for some engines, it is by no means true for all. In the case of the Jaguar 5 liter direct injected motor, the factory manual states in no uncertain terms that half a liter overfill means park it immediately for a partial pumpout or tow to the dealer. I have owned two cars in my past that blew head gaskets due to minor oil overfilling, it can be very damaging if this happens.