Just how good is the 20/1.7?

Right and wrong. The focal-length, and, more importantly, field-of-view specifications of MFT lenses are after, not before, any automatic software-correction of distortion. The opposite would be directly misleading.

However, this distortion correction is carried out by Panasonic and Olympus bodies alike for any lens that demands it.

What you are thinking about is probably another type of software correction where there is a difference between brands. Lateral CA is auto-corrected only when a Panasonic lens is used with a Panasonic body. In all other cases, it is not auto-corrected.