I am creating a GUI interface that will be using a 7" touch display with a raspberry pi 3.  I want the GUI to take the place of the desktop, I do not want it displayed in a window on the desktop. any thoughts on how to do that.  I have read the raspberry pi documentation to edit the rc.local script to start the application at login, but I can not figure out how to set up the python GUI with out creating a window
Your pi boots up and displays a console - just text - by running a program (getty). Then you run another application called a graphical display manager which then runs a window manager. On a pi it is usually gnome but there are many others,.. this window manager is what displays your GUI window. What you want is obviously possible, it is just that it is non-trivial to do. What you are talking about is either kiosk-mode application still running 'on the desktop' as you say but which obscures the desktop completely and does not allow you to switch or de-focus or an even more complicated JeOS like Kodi/XBMC bare metal installation running without your current window manager. Your python would have to do the job of the display manager and the window manager and it would be very, very slow. 
Use a really light window manager and go kiosk mode. Or you could go with text! There are libraries eg ncurses but I'm not sure how that would work with your touch screen display.
how to replace the desktop interface with a python application