Did quail or chicken, we hear (7)
I believe the answer is:
cowered
'did quail' is the definition.
(to cower is to quail or show fear)
'chicken we hear' is the wordplay.
'chicken' becomes 'coward' (similar in meaning).
'we hear' shows a homophone (sound like).
'coward' sounds like 'COWERED'.
'or' is the link.
(Other definitions for cowered that I've seen before include "Showed fear" , "looked fearful" , "Cringed" .)