You can't assume anything. You've ruled out that this woman is your biological grandmother because your paternal grandmother died before you were born. But DNA is harsh. Sometimes your real family members are not your biological family. If your match is at least 70-75 years old, she could be your grandmother. If she is at least 13-15 years younger than any of your children (if you have children), you could be her grandmother.
Half-sibling is a strong fit based on the cMs and would mean that your dad fathered a child with a woman other than your mother. Depending on your match's age, she could have been born long before your mother came around. Your dad might not even had known about her. Or maybe he was married before and you didn't know.
But here's the thing, you say you have other matches and have used them to narrow down the family line your new match comes from. That you know she matches you on your "father's mother's mother's" line. If she were your half-sibling, she would match your close family matches on your father's father's line. And your father's mother's father's line. If she does not, then you are not talking about a half-sibling. But if she merely matches one or more people on that one great grandmother's line and you don't have people from other lines to look at, then you haven't ruled out half-sibling.
Given the fact that you have other matches and so can trace some family lines, and given the cM total of 1,697, with the Shared cM Project, here are your full set of options:
- Grandmother/granddaughter. Not likely but not impossible if the age fits.
- Half-sibling. Likely or impossible based on which other close family members of yours have tested and if they do or don't match with her.
- Aunt/niece. Your father has a full sibling you didn't know about. (In this case the match would match close family from both your dad's mom's side and your dad's dad's side.)
- Great aunt/niece. Your paternal grandmother has a full sibling you didn't know about.
You are correct to rule out your aunt's potential children (your first cousin) and your half uncle's children (half first cousin).