How can a logic 0 change a logic 1 to logic 0 given these circumstances?
The question is not clear.  It sounds like you are asking why/how the logic 0 output on RB3 can force the RB7 input to a logic 0 even though it has a weak pull up to a logic 1.  The answer is that it is a very weak (large value resistor) pullup intentionally, so that it can be overridden without damage.

Also, a logic 0 is not and "absence" of voltage.  A logic 0 is a voltage within a specifically defined range of values, often 0.0 V to 0.8 V.  An absence of voltage is a floating pin.  If it is an input pin, the weak pullup with turn an absence of voltage into a logic 1.