if the polished MK7 is the one blown up..
What is the Battle Damage armor he wears in the diner?
This is just a movie gaffe.
During IM2, they didn't have a mockup of the MKIV, MKV, MKVI or WM.
They had a full size wearable MKII from IM1 that was reworked to be the autopsy version.
In any case, after Avengers, they made full size replicas of all the marks so far, for going on the road at cons, and these were also used for the HOA in IM3. With the exception of the MKIII which is always displayed damaged, every other armour was pristine. But the CG version wasn't pristine, even though it didn't have "Avengers levels of damage".
The MKVII he wears at the diner is not the full blown Avengers BD suit, leading to the conclusion that the Avengers MKVII(And presumably the beat up MKVI from Avengers Tower), were retired, recycled or seriously repaired prior to the time of IM3.
With that in mind, it would appear that the MKVII(up to the beginning of IM3 at least), was Tony's "runabout" armour that he used on a daily basis. A tried and tested model he was comfortable with.
But...
Even that's not true. On set, not only was it the MK42 that Tony had sitting outside the diner, IP was there too!
It must have been during post that they decided to tie it to the Avengers movie by having him use the MKVII, even though he had built 35 newer armours since then.