K&N is definitely faking their numbers.
Simply changing from a stock filter to a cotton/oil filter in the stock box is going to gain you a total of 0 hp. I used to work for a company that was a competitor to K&N. Their filters actually flowed better than K&N and still didn't pick up the numbers K&N claims theirs do.
As for the claim that a cold air intake is not ever going to gain 17 whp, that I can tell you is untrue. Is it common? Hell no, but on certain vehicles with bad stock set ups it is possible. Before I left they developed an intake for 07-current Silverados. They actually did back to back dyno tests at my friends shop on his dyno and picked up something ridiculous like 19 hp and 32 ft lb of torque at the wheels.
I saw the dyno sheets myself on that one and was absolutely amazed. There are other cars throughout the past several years that are known to have severely restrictive stock intake setups that can gain ~10 hp with a CAI set up, but for the vast majority of us, we are lucky to get 1-2 hp to the crank.