I think it is saying that you can consume 1700 calories.
One way to look at it is this. To lose a pound, you have to burn approximately 3500 more calories than you consume. To burn three pounds, then, you need to burn 10,500 more calories than you consume.
If you want to lose those three pounds in three weeks, you need a deficit of 500 calories a day (500 a day times seven days times three weeks is 10,500). If you want to burn those three pounds in two weeks, you need a deficit of 750 a day; if you want to burn them in one week, a deficit of 1500 a day is needed.
Just curious, though, if you are 7-8% body fat, how do you know if you are burning fat and not burning muscle? It seems as if you don't have much fat left to lose.
And now that you don't have to be perfect, you can be good.