Identify the circumference of the circle.

When the 300 cm side of the rectangular tin plate is bent to form a circle, this length becomes the circumference ($C$) of the circle.

$$C = 300 \text{ cm}$$

$$C = \pi \times D$$

Where $D$ is the diameter and $\pi = 3.14$.

$$300 \text{ cm} = 3.14 \times D$$ $$D = \frac{300 \text{ cm}}{3.14}$$ $$D \approx 95.5414 \text{ cm}$$

Rounding to two decimal places:

$$D \approx 95.54 \text{ cm}$$

The diameter of the cylindrical tank is $\boxed{\text{95.54 cm}}$.

7.2 Calculate the volume of water that the cylindrical tank can hold in litres. You may use the formula: Volume of a cylindrical tank = $\pi \times r^2 \times$ height; Using $\pi = 3.14$ and $1000 \text{ cm}^3 = 1 \text{ litre}$.

From 7.1, the diameter ($D$) is approximately $95.5414 \text{ cm}$.
The radius ($r$) is half of the diameter:

$$r = \frac{D}{2} = \frac{95.5414 \text{ cm}}{2} = 47.7707 \text{ cm}$$

The height ($h$) of the cylindrical tank is the other dimension of the rectangular plate:

$$h = 250 \text{ cm}$$

Using $\pi = 3.14$:

$$V = 3.14 \times (47.7707 \text{ cm})^2 \times 250 \text{ cm}$$ $$V = 3.14 \times 2282.038 \text{ cm}^2 \times 250 \text{ cm}$$ $$V = 3.14 \times 570509.5 \text{ cm}^3$$ $$V \approx 1791799.83 \text{ cm}^3$$

Given $1000 \text{ cm}^3 = 1 \text{ litre}$.

$$V_{\text{litres}} = \frac{1791799.83 \text{ cm}^3}{1000 \text{ cm}^3/\text{litre}}$$ $$V_{\text{litres}} \approx 1791.79983 \text{ litres}$$

Rounding to the nearest litre:

$$V_{\text{litres}} \approx 1792 \text{ litres}$$

The volume of water the cylindrical tank can hold is approximately $\boxed{\text{1792 litres}}$.