Tony finds out the "Mandarin bombings" were really soldiers on Extremis whose bodies rejected it and exploded, covered up to hide the treatment's flaws.
Pepper, injected with Extremis by Killian, survives a deadly fall because of it and kills Killian. Afterwards Tony helps stabilize the Extremis in her.
The flaw that makes Extremis a weapon is the danger hanging over Pepper. The film ends with Tony fixing it for her rather than for Killian.
Source: Wikipedia: Iron Man 3, Plot