JPEG. and no, i have used 550D for 2 years now and i know its limits and capabilities. i shot several matched in Zavrč (place in those pictures) at the same hour and conditions and no, definitely not. 550D doesnt come close.
Yes, the JPG engine (something Canon should have addressed a long time ago) was overhauled, so it now has more aggressive but better NR, better everything really. They also updated DPP to match. If you shoot raw, the differences are substantially less overwhelming, based on back to raw images that many have taken and shared.
Canon has really put forth some effort on the software/firmware side of the house in the past few years!
As to my disbelief, and you having both cameras, it is quite easy to shoot a raw image from both, setting them up identically and exposing identically, and processing identically. 
The 70D definitely produces better JPGs than the 7D, for the JPG shooters amongst us. 
Canon would never do it, but it would be fun if they would update the JPG engine in a subsequent firmware update on the 7D. That would create some ripples.



