TZ7 has got this HD Video with zoom capability that LX3 doesn't have. I believe picture from LX3 can be better than TZ7. I bought TZ7 for its video performance and I'm impressed with the picture quality comparing to my Sony W Series.
I may end up just having the TZ7 for my next overseas trip.
This is my personal review. Tz 7 does not have much control unlike Lx3. It lack of Long Exposure setting, Manual function and Manual focus setting.
It does not have the ability to mount external flash. Tz7 is good on video recording compare to LX3. LX3 recording really lost out to Tz7. BUT, Tz7 zoom while recording,
does not allow user to focus. Meaning, u can zoom in and out but it will not "automatic" be clear
Size, Tz7 easy to bring around cos there is no protruding lens like Lx3. Small and light weight but the build not as good as LX3
Conclusion: Depend on ur need. If you want to just take average photo but want that extra HD recording, then got for TZ7 (cheaper than LX3)
If you usually shoot natural .. then best got for Lx3, missing the Zoom while recording still acceptable.
Actually the TZ7 will automatically focus while you zoom in and out while recording.
I bought the TZ7 for its compactness and zoom range, not so much for the HD video but I have to say the HD video is very good. Picture quality is so-so with noise and artifacts. So get an LX3 or something else if image quality is important to you.