There are a few states that don't require this but in general, it's the case. You can get an exception for advanced degrees (PhD, MPH or MBA done w/ your MD) w/o too much hassle. You can get exceptions in other cases too but you usually have to jump through more hoops.
i waited about 5 years...just short of the 7 year cut-off...after 3 yrs of general and 2 of plastic...i dont recommend waiting that long, i had to open a book and study. it would have been a breeze if i took it just after 4th yr med school.
In order to take step 3 you have to have graduated from med school so unless there is a big break between graduation and starting residency it is probably better to just take it during intern year, but you can take it prior to starting residency.