Could you explain this heal?

[Som1Lse]

What's state: 1700 and what's the point of the opoint:?

State 1700 is simply a heal effect. It's the same used in John's self heal (DvJ).
The opoint creates a milk bottle at y: -999 (outside of the viewable area), and then in the next frame the character drinks it (state 17), in the last frame of the move, the milk bottle is thrown off screen so it disappears.
The purpose of the milk bottle, is to prevent the character from going past the 500 health cap. You can see that drinking a milk bottle never heals above 500 health and this is exploited to reset the health down to 500 if the heal effect (negative damage) went past the cap.