It is well known equality in AM-GM holds iff all the variables are equal. The proof is here: Proofs of AM-GM inequality if you want to see why. The first way works because you have
$x+y+z=7$
$\Longleftrightarrow 2(\frac{x}{2})+3(\frac{y}{3})+2(\frac{z}{2})=7$
So using AM-GM we have
$\frac{\frac{x}{2}+\frac{x}{2}+\frac{y}{3}+\frac{y}{3}+\frac{y}{3}+\frac{z}{2}+\frac{z}{2}}{7}\ge \sqrt[7]{\frac{x^2y^3z^2}{432}}$
$\Longrightarrow \bigg(\frac{\frac{x}{2}+\frac{x}{2}+\frac{y}{3}+\frac{y}{3}+\frac{y}{3}+\frac{z}{2}+\frac{z}{2}}{7}\bigg)^7\ge \frac{x^2y^3z^2}{432}$
$\Longleftrightarrow \frac{x^2y^3z^2}{432}\le 1$
$\Longleftrightarrow x^2y^3z^2\le 432$
so the maximum value is achieved when
$\frac{x}{2}=\frac{x}{2}=\frac{y}{3}=\frac{y}{3}=\frac{y}{3}=\frac{z}{2}=\frac{z}{2}$, or equivalently $2x=3y=2z$, so plugging these back in the original equation we get $x=z=2$ and $y=3$.
The second approach cannot work because equality cannot hold;
proceed as you said, take $2x,x,y,y,y,2z,z$, so we get
$$3(x+y+z)=2x+x+y+y+y+2z+z=21$$
so using AM-GM we get
$\frac{2x+x+y+y+y+2z+z}{7}\ge \sqrt[7]{4x^2y^3z^2}$
$\Longleftrightarrow 4x^2y^3z^2\le \big(\frac{21}{7}\big)^7=3^7$
$\Longleftrightarrow x^2y^3z^2\le \frac{3^7}{4}$
with equality iff $2x=x=y=y=y=2z=z$, in particular, $2x=x\Rightarrow x=0$, which is absurd, because $x,y,z>0$. Hope this answers the question :)