Why is the magneto drop check done at 1700 RPM?
According to this article from the New Zealand CAA:


  The particular rpm setting at which the check is done is not very
  important for the purposes of the check, but other engine handling
  considerations will usually mean a recommendation from the engine or
  aircraft manufacturer for an rpm setting from the low end of the
  cruise power range. From the magneto checking point of view, the
  important aspect is that the check on any particular aircraft should
  be done consistently at the same rpm, so that any trend can be
  monitored. There is little to be gained, for example, in comparing
  today’s 150 rpm drop at 2000 rpm with yesterday’s 100 rpm drop at 1700
  rpm


And this Lycoming service instruction mentions a range of 1800-2000RPM:


  Aircraft that are equipped with fixed pitch propellers, or not
  equipped with a manifold pressure gage, may check magneto drop-off
  with the engine operating at approximately 1800 RPM (2000 RPM
  maximum).


Obviously you should always follow the procedure and the RPM settings in the aircraft's POH, but those quotes suggest that getting the RPM exactly right isn't essential. However, the comment about consistency implies that the RPM drops will be different depending on your starting RPM, so if you don't use the POH settings then you have no way to know if what you're seeing is acceptable or not.

As for why 1700RPM and not some other value, I assume it's a setting that the engine manufacturer decides is high enough to put a realistic load on the engine but not so high that you could overheat it during the run-up checks. Or, as GdD suggested, it could be to avoid overloading the brakes. But I'm not an engine expert, and someone else might be able to give you a better explanation.