On March 30, 2007, he helped Finlay beat Mr. Kennedy by performing a senton bomb off a stepladder onto Mr. Kennedy, essentially copying Kennedy's move, the Kenton Bomb. SmackDown! announcers Michael Cole and JBL immediately referred to the move as the "Lepreton Bomb." During the Money in the Bank ladder match at WrestleMania 23, which Finlay was involved in, Mr. Kennedy hit Hornswoggle with a Green Bay Plunge off of a ladder when Hornswoggle tried to interfere. On the following edition of SmackDown!, Finlay attacked Mr. Kennedy after his match and challenged him to a handicap match with Postl as Finlay's partner. Before the match, Mr. Kennedy apologized for hurting Hornswoggle. Finlay accepted his apology and formed a team with Kennedy.
On September 10, in conclusion to the Mr. McMahon "illegitimate storyline" on Raw, Postl was revealed to be Vince's son in a storyline. Hornswoggle still made appearances on SmackDown!, as well. Although his partnership with Finlay was quietly phased out, he still continued to feud with Jamie Noble. His feud with Noble ended on the September 28 edition of SmackDown! when Acting General Manager Vickie Guerrero forced Hornswoggle to surrender the Cruiserweight Championship (which was later abandoned), citing that his status as Mr. McMahon's son and his diminutive stature would eventually jeopardize his well-being. After the affair of finding out who the illegitimate son was, Mr. McMahon began giving Hornswoggle matches against competitors that were much larger than him. His reason for doing this, was that he was showing his son, "tough love." Hornswoggle was placed into a match against The Great Khali at Survivor Series. At the event, Khali defeated Hornswoggle by disqualification when Finlay attacked Khali on Hornswoggle's behalf. This was the first time that Finlay appeared together with Hornswoggle since the beginning of the Hornswoggle and Mr. McMahon storyline. Finlay's attack on Khali started a feud between the two. At Armageddon, Finlay defeated Khali with the help of Hornswoggle. In addition, Hornswoggle also faced Khali on the 15th Anniversary of Raw, but Hulk Hogan made a surprise return in a one night appearance to come to Hornswoggle's aid.
Hornswoggle appeared in the Royal Rumble match, hiding under the ring upon entering until he came out and eliminated The Miz; Finlay appeared to protect Hornswoggle and took himself out of the match. On the February 18 edition of Raw, Hornswoggle had a scheduled steel cage match against his storyline father, Mr. McMahon. Finlay tried to get involved, but was attacked and handcuffed to the ring ropes by JBL. Mr. McMahon left the ring and allowed JBL to beat up Hornswoggle while an enraged Finlay watched. Following this, WWE.com announced that Hornswoggle had kayfabe suffered internal injuries, including bleeding of the brain and spinal trauma. On February 25, JBL claimed that Hornswoggle is not Mr. McMahon's son, but "in reality is the son of Finlay". The next week on Raw, Finlay confirmed Hornswoggle was indeed his son, then was forced to watch helplessly as JBL assaulted Hornswoggle in his hospital bed. Postl returned to live television at WrestleMania XXIV, accompanying Finlay to the ring for his Belfast Brawl with JBL, once interfering by hitting JBL with a kendo stick, allowing Finlay to get the shot in with the shillelagh. JBL won the match by hitting Finlay with the kendo stick in the shins and following up with the Clothesline from Hell.
He made his in-ring return on April 18 episode of SmackDown, defeating Matt Striker after a Tadpole Splash. On the April 21 edition of Raw, Hornswoggle was entered in the 2008 King of the Ring, but he was unsuccessful as he lost to William Regal in the first round after being submitting to the Regal Stretch in 19 seconds. As part of the 2008 WWE Supplemental Draft, Hornswoggle was drafted to the ECW brand along with Finlay. At Night of Champions, Hornswoggle and Finlay challenged John Morrison and The Miz for the WWE Tag Team Championship, but failed to win.
On April 13, 2009, Hornswoggle was drafted to the Raw brand, without Finlay, as part of the 2009 Supplemental Draft.
Hornswoggle's most noted feud on Raw was against Chavo Guerrero in which the two superstars competed in a series of gimmick matches each week determined by the weekly Guest Host for Raw (Bullrope Match, Blindfold Match, Sharp Dressed Man Match, etc). The program began on July 7, 2009 on WWE Superstars and continued on to WWE Raw, after much fan criticism over the longetivity of the program and how Chavo Guerrero was being treated by losing every single week to Hornswoggle.
On the September 1st edition of E!'s Soup, host Joel McHale made fun of the Hornswoggle vs Chavo Guerrero Bullrope Match from the August 31, 2009 edition of WWE Raw. Chavo Guerrero was "forced" to wrestle in a Cow Costume, complete with a mask, by Guest Host Dusty Rhodes. McHale said that "WWE Raw is one of the highest rated shows on cable TV and is seen by millions all over the world". However, after showing clips from the "match", he wondered why so many people watched with segments such as that.
The match was scorned by the Internet Wrestling Community as longtime announcer Jim Ross announced on his Blog website that "WWE had received a ridiculous amount of emails damning the Chavo Guerrero-Hornswoggle storyline".
On the September 28th edition of WWE Raw, Hornswoggle and Santino Marella participated in a Tag Team match against Chavo Guerrero and Chris Masters. After the match, Chris Masters placed Hornswoggle in his Masterlock submission hold, only to be forced to break the hold by Chavo, who had apparently had a change of heart toward Hornswoggle, despite being the target of his antics for weeks. The following week, Guerrero and Masters teamed up again, in a losing effort. Angered by the outcome, Masters applied the Masterlock to Chavo, only to be thwarted this time by Hornswoggle, who appeared to help Chavo drive off Masters. Hornswoggle then gave Guerrerro a miniature DX crotch-chop while running up the entrance ramp. On the October 26th edition of Raw, after several weeks of wearing D-Generation X gear and executing DX Chops, Hornswoggle got a legal paper saying he was no longer allowed to wear any DX clothing straight from DX. Later on in the night, he got his revenge by helping the Raw guest hosts Kyle Busch and Joey Logano put DX against each other and John Cena for the WWE Championship at Survivor Series while still wearing the DX gear. He soon appeared in backstage segments with DX, tricking them repeatedly.