Tim Gunn Project Runway Season 7 Episode 3 Costume Institute

Tim Gunn at New York City's Metropolitan Museum of Art's Costume Institute. Photo: MyLifetime.com

Last week's "Green Acres"-themed potato sack challenge had us worried "Project Runway" was detouring from its promised "all New York" season.

Fortunately, last night's episode got its seams straight and took things back where they belong -- the heart of the Big Apple, specifically, the Metropolitan Museum of Art's famed Costume Institute.

The Challenge: Designers are instructed to create a high-end signature look worthy of the Costume Institute, where they are trying to refrain from drooling on the Dior and Balenciaga pieces. "I've never been this close to Dior before," gushes Seth Aaron Henderson, who has made it clear that he wants to be Christian Dior. Seriously.

The Twist: It takes two, babe. Some of the alpha contestants are called out from the pack and instructed to choose a partner to collaborate with on their design. The queen fights begin!

Breaking News: The contestants are given $500 to complete their looks -- the most money allotted for a challenge in "Project Runway" history, according to design mentor Tim Gunn. This sure makes shopping at Mood Fabrics way more fun.

Let's Twist Again: We thought Gunn was bringing a surprise guest to the workroom, but he just showed up to complicate matters. Big time. The designers are given a second challenge. Gunn instructs them to make a mass market look for a fashionable customer who desires a look for less.

Plus, they must base their bargain look on one of the competing teams' works-in-progress The look also must be completed at a fraction of their original budget. Did you get all that? We needed to take notes. As for the measly budget? As Henderson explains, "That means napkins, paper towels and hot glue."

The Workroom Entertainment: Gunn tries hard not to laugh at the spaced-out antics of Ping Wu, and we're intrigued as Anthony Williams chooses the Dior-worshiping Henderson as his partner. Team leader Williams picks mustard, black and red fabrics for his looks. He proclaims, "So at this point, I think we are designing a gown for the vice president of McDonald's."

We are so worried. What if the judges don't like fast food?

The Guest Judge: It's British designer Matthew Williamson. He delivers a thoughtful, but low-key assessment of the designers' pieces.

The Runway Show: A high-end, low-end mess. Who made what? Ballgowns reign supreme as the designers try their hand at haute couture with inexpensive knock-offs brought out for a second pass. For us, it didn't really work.

Best Line by a Judge: Michael Kors delivers the quip of the week again. On Williams' McDonald's couture: "It looks like the Southern cotillion party from hell." Ouch.

Who's In: We have some official front runners. Designers Jay Nicolas Sario and Mila Hermanovski make it to the top two, along with their partners, for the second week in a row. Hermanovski wins for an interesting collection of separates that especially wows Kors.

Separates, Kors declares, "is really how we dress." And as we get to see Hermanovski up close, her calculating, competitive spirit reminds us of Season 6 winner Irina Shabayeva. Too early to say for sure, but she may be getting the bitch edit as well.

Who's Out: Tissues please. It's Wu, the lovable crybaby. (She was so fun to have around.) Yet, her bizarre method of not fitting her models and draping fabric every which way finally gets the best of her. Her runway model even complained to the judges about her fit methods. A tearful Wu is sent off to pack where she pleads with her fellow contestants to remember a "Happy Ping, not a crying Ping."

What's Got Us Worried: Williams lands in the bottom two, the same place he was in week one.The judges are questioning his taste level and we can see why. He may be producing some of the best one-liners in the history of the show, but now it's time to focus on the hemlines.