Just guessing:

The /usr/bin/7z file is a shell script that starts the binary that does the actual work. /usr/lib/p7zip/7z might also be a shell script for all I know.

Somewhere in this chain, something has changed, making it go in a loop trying to resolve the actual place where the binary is.

My suggestion would be to look at these files, follow the chain and see where it loops and break that loop.