Okay this question has been smacking my brain for a while....

Step 1 - Let's say I activate Level Conversion Lab on a Level 7 monster in my hand. The number I get off the dice roll is 3.

Step 2 - I then summon that Level 7 as a Level 3. I then activate Metamorphosis on that same monster.

Problem - When I go into the Fusion Deck, do I bring out a Level 7 Fusion or a Level 3 Fusion????

I'm assuming since it hits the Graveyard as a Level 7, I can Special Summon a Level 7 Fusion. I just want to make sure I'm making the right call here.

Your monster's level is changed by Level Conversion Lab for the duration of the turn. So, when you offer it for Metamorphosis, I assume that a LV3 monster would be summoned, in your case.

Level Conversion Lab does not change orignal stars on the card. Even though it is a lvl 3 due to a circumstance, the oringal stars haven't changed. If you have Legendary Ocean on the field and Sinister Serpant due to the fact of Legendary Ocean Sinister is reduced to a 0 Stars. When you meta it, meta seaches for the stars on the card not what other effects are being applied to the card. It finds the 1 star and therefore you can get your TER. Same mechcanics here.

Actually raven your theory is not correct............ read carefully:
the number of stars don't have any importance for Meta, the only thing that matters is what the monster's level is in the precise moment of activation............. so in LCL case the monster brought out by Meta would have to be a Level 3 Fusion monster

Yes, Metamorphosis DOES NOT state anywhere that it summons according to "original" level. It only bases it on CURRENT level, so you would only be able to special summon a level THREE fusion as the monster you want to use Metamorphosis on is a level 3 monster until the end of the turn.