The expended 4th level slot reverts to the 4th level slot after a long rest
You didn't create a slot, you refilled an empty one. The key is this text in the item description:
regain one expended spell slot.
The rules for a long rest say that all of your spell slots are restored. This item doesn't change that; if it changed that it would say so.
Per your comment, you cast a 4th level spell and no third level spells.
- A 7th level wizard starts with 4/3/3/1 spell slots for spell levels
You cast Banishment: your available spell slots are now 4/3/3/0
You use the pearl of power.
You now have 4/3/4*/0 since your 4th level slot was refilled with a 3rd level slot's worth of magic.
If the expended slot was of 4th level or higher, the new slot is 3rd
level. (item, SRD, p. 232)
To answer your bolded question - Yes.
Until a long rest is completed you can expend up to 4 3rd level spells ... which you could have done before burning that 4th level slot1. This temporary condition changes with a long rest - it does not add a slot to your basic allotment. A similar thing happens with Sorcerers and spell points converted to spell slots2.
You can illustrate the pearl's benefit as "the 4th level slot, filled to the 3/4 line" like an empty ale mug being 3/4ths refilled. You expend one more 3rd level slot of any prepared spell, not another 4th level slot, until you finish a long rest -- which could have done if you'd used a 4th level slot to cast a 3rd level spell rather than banishment.
To check consistency revert to a 5th level wizard. You have 1 3rd level slot. You cast fly. Your 3rd level spell slot is empty until you refilled during a long rest. Use the pearl of power, refilling that slot before the long rest. You can cast fly again before the next long rest since your 3rd level spot was refilled.
1Casting a Spell at a Higher Level
When a spellcaster casts a spell using a slot that is of a higher
level than the spell, the spell assumes the higher level for that
casting. For instance, if Umara casts magic missile using one of her
2nd-level slots, that magic missile is 2nd level. Effectively, the
spell expands to fill the slot it is put into. Some spells, such as
magic missile and cure wounds, have more powerful effects when cast at
a higher level, as detailed in a spell’s description.
2 Creating Spell Slots.
You can transform unexpended sorcery points into one spell slot as a bonus action on your turn. The Creating Spell Slots table shows the cost of creating a spell slot of a given level. You can create spell slots no higher in level than 5th. Any spell slot you create with this feature vanishes when you finish a long rest. (SRD, p. 43)