Is the value of natural armor halved when regular armor is also worn?

I don't think so. I think you just add them both together. I don't know what happens when you armor exceeds 7. I guess you just continue the chart or stay at 7. I could be wrong; what page are you reading on?

It isn't. And as far as I know, armor goes up to 10 (if you check the combat table, you'll notice that it goes that high).