I have asked a Bulgarian scientist, who studies symbolism on Balkan weapons about the significance of the Seven Sleepers inscriptions on yatagans. She explained it to me quite well, and here is my very poor attempt at a summary:
Even though it was originally a Christian legend, the tale of the seven sleepers was adopted by Muslims as well. On the surface, the legend is about strength of faith. It could also be an alegory of death and salvation. When a person dies, he goes to sleep, only to be awakened by the Almighty. Therefore, if the owner of the yatagan dies in battle, he can expect to be saved by Allah and enter Paradise. This ties in well with the concept of martyrdom.
I am not sure if this is the correct explanation, but it makes a lot of sense to me.
Best regards,
Teodor