In my opinion, one inch makes a huge difference. You'd probably be just fine jumping in a friend's 16" for a quick ride, but if a 17" feels right for you then I wouldn't look at anything smaller than a 16.5". I have had the opposite problem- I'm comfortably in the 15" size range in western saddles, but seriously considered buying a 16" Circle Y earlier in the year. The guy let me try the saddle, and the seat seemed WAY too big compared to the 15" that I've ridden in. Super comfy, but I was not willing to buy a saddle that really didn't fit me at all because of the good price and comfort.
The only way that I would consider doing it is if you are either able to sit in or try out a number of 16" saddles beforehand, or if you are willing to resell this saddle if it doesn't fit you properly. 16" is a pretty common western seat size, so if you have friends with western saddles then it is possible that you have some you can put your butt in. If this particular saddle is local, then I would strongly suggest a trial period, or going to the seller/tack store/whatever and actually sitting in it. The fit between sitting in it on a saddle rack and on a horse can be different, but you should be able to tell well enough if it definitely won't work before you buy it!
Also- you don't mention what sort of saddle you normally ride in. Have you been riding English up to this point and looking to buy your first western saddle? Or are you just looking for a new one for bringing your horse back? If you're used to riding in a 17" English saddle, then a 17" Western saddle will not be the correct size. Western and English saddles are measured differently, so for the most part a 17" English saddle is comparable to a 15" western saddle. Pardon me if you are aware of this difference or have never ridden English, but not everyone knows about saddle sizing between disciplines!