I'll let Fr Z explain:
"But Father! But Father!", some of you are no doubt saying, "What’s with that seventh candle thing anyway? Big deal!"Many people have noticed on the excellent mitre that the Pope was wearing. (Notice also the Cardinal's dalmatic.)
Yes, it is a big deal. It is a signal to a watching world. Indeed the whole world was watching, too: this was the televised Midnight Mass.
The seventh candle could be used for Pontifical High Mass when celebrated by an Ordinary in his diocese (or by the Pope anywhere, of course). The seventh candle, placed in the middle and in line with the other six, but it should be a little higher. This pushes the crucifix a little out of line… which also emphasizes it, in my opinion. Pope Benedict is acutely sensitive to the position of the Cross during Holy Mass.
Fr Z shows the stemma of Pope John Paul I as evidence that it was his mitre. Here is a remarkable comparison, thanks to the inimitable Papa Ratzinger Forum. First, we see Pope Benedict wearing the mitre for the Urbi et Orbi blessing yesterday:
Then, Pope John Paul I wearing the same mitre - as Cardinal Ratzinger pays his respects:
Having some interest in ecclesiastical headgear, I followed up the link on several blogs to the site devoted to clerical hats: Klerikale Kopfbedeckungen. But I have to confess that I found it a little worrying after the first couple of hundred. I think you probably want to see this as a site for reference rather than for visiting every day :-)