7 years old seems quite young, so my answer is not specifically thought for this age (it is much inspired by a recent twitter thread about these questions for 12 yo), but I hope it can still help.
The example you give shows precisely how using "real world" interpretations can be misinterpreted, therefore I do not think that coming up with more real-world interpretation helps (such interpretation are needed in the course of learning fraction, but they are in my opinion not the solution to your particular problem).
What seems is missing is the very meaning of the symbols $\frac12$, $\frac24$. First and foremost : $\frac12$ is a number, not an operation. This is a common belief that needs to be dispelled, but is very understandable given the way we write. In your example, $\frac24$ is interpreted by the pupil as "2 out of 4", which it is not. I think that it might actually be easier to stick to the maths here in order not to confuse these things.
So what is $\frac24$ ? By definition, it is the unique number that, when multiplied by $4$, gives $2$. Nothing less, nothing more. You can lean on the relative integers to explain this:
"Do you remember that we could not perform the operation $3-5$ at some point, because we would have needed a number that, when added $5$, gives $3$? And we only had non-negative number, none of which would do? Then we introduced new numbers, e.g. $-2$, that yields solutions to such problems. Here it is the same: with only integers, we cannot find any number which, when multiplied by $4$, would give $2$. So we just added numbers to that effect, and denoted them with this somewhat weird notation that, you'll see, will prove very convenient in computation."
Note 1. If you have not yet dealt with negative numbers, maybe it would be easier to do so first. You can use level buttons in an elevator for concreteness, find this much better then the usual money/debt considerations.
Note 2. This is a fantastic opportunity to recall that the division operation is performed by actually solving an equation.
Now, how can one see that $\frac12=\frac24$? We should use the definition, and e.g. look at what happens to $\frac12$ when we multiply it by $4$. Its own definition only says what happens when we multiply it by $2$, so let us use that $4=2\times 2$ to observe that multiplying $\frac12$ by $4$ is the same as multiplying it by $2$, and then multiplying the result by $2$. By definition $\frac12\times 2 = 1$, so that $\frac12 \times 4 = \frac12\times 2\times 2 = 1\times 2 = 2$. Now by definition, the number that, when multiplied by $4$, gives $2$, is $\frac24$. So $\frac12 = \frac24$. That seems long and hard only because it is very detailed; this motivates the learning of computation techniques that will simplify these kind of reasoning and "factor" them quite a lot. Because we are used to these computations, we easily forget where they come from, but they need to be grounded in the definition in order to avoid them being merely magic formulas.
Other erroneous conceptions that will probably need to be dispelled along the way:
"two different sets of symbols must represent two different numbers": here it can be a problem to even imagine that we can use both $\frac12$ and $\frac24$ to denote the very same thing; this is unavoidable from our definitions: in our words, we want the number we added to be a solution to $4x=2$ to be unique, but it may well have been added as solution of another equation (here, $2x=1$),
"equality is like the = button of my pocket calculator: it is an oriented symbols that tells what happens when I perform the operation mentioned in the left term": very common conception, even among undergrads. Often $\frac12 =\frac24$ will puzzle students much more than $\frac24 = \frac12$, but in any case to understand what we mean by this they need to be told that '=' merely expresses that the terms on both sides are different guises for the very same object.