Since Patrick Jane already knew he was being watched ,why would he give his observers real information if he could just trick them.

I think the list of 7 is fake.

Jane knows who is Red John, because the happy memory was in fact a trap ,Jane gave to each of his suspects different information about childhood memory's, all well disguised, and RJ revealed himself by killing the girl. Jane tricked him because he knew Red John wouldn't resist such opportunity.